This paper is a critical examination of the ‘flying geese’ and ‘billiard ball’ models of foreign direct investment (FDI) and their ability to explain the spatial expansion of Japanese electronics multinationals (MNCs) in Asia-Pacific countries from 1985 to 1996. Data on Japanese FDI are analyzed in this region at the aggregate, sectoral, and firm level. The paper commences with a review of the flying geese model, especially that version which interprets Japanese FDI as a catalyst for Asian development, and the billiard ball metaphor which suggests a mechanism for host countries to ‘catch up’ with Japan. The authors then turn to an analysis of Japanese FDI in Asia-Pacific together with employment data for fourteen major firms. This allows an evaluation of the two models in terms of recent geographical patterns of investment and employment growth by electronics MNCs. A special case study of Matsushita Electric Industrial Co. Ltd (MEI) helps flesh out the evolving geography of Japanese electronics firms in Asia-Pacific. Although the results support the overall patterns suggested by the two models, the authors argue that metaphors and analogies such as flying geese and billiard balls should not be used casually and as a substitute for analysis.
Pacific Asia has looked to direct foreign investment (DFI) to achieve economic growth and technological catch-up, and Japanese multinational corporations (MNCs) have responded massively. This paper evaluates Japanese MNCs as a source of industrial learning and technological transfer in the region, drawing from a large research literature and from the authors' own surveys of Japanese DFI in the electronics sector. Japan's historic learning-based approach to industrialisation is captured by the flying geese metaphor of structural transformation. As an explanation of the transfer of technological know-how from Japan to Pacific Asia, however, the flying geese model is problematical. This paper reflects on the effectiveness, problems and dilemmas of Japanese MNCs in transferring such know-how to the region from a political economy perspective summarised as a 'reverse product cycle model'. This model portrays DFI as a 'bargain' between Japanese MNCs and host countries, and which becomes more difficult to negotiate as DFI moves from low-skilled manufacturing to more innovative activities. The bases for this hypothesis relate to the increased complexity of industrial know-how and the conflicting motivations between MNCs and host countries in early stages of the product life cycle. In practice, however, this 'bargain' has developed differently among Asian countries, and we illustrate these differences by comparing the experiences of South Korea, Taiwan and Malaysia. Copyright (c) 2004 by the Royal Dutch Geographical Society KNAG.
The ability of clusters generated by direct foreign investment (DFI) in emerging economies to generate sustained, value‐added growth is a matter of controversy. This article assesses this debate with reference to the role of Japanese electronics multinational corporations (MNCs) in the development of clusters in Malaysia. Conceptually, we present a typology of DFI‐generated industrial clusters that represent increasing degrees of commitment to local value creation and upgrading. Empirically, we conducted a survey of 10 Japanese firms in Malaysia that examined whether or not their factories increased technological upgrading, increasingly embedded their operations through using local skilled labor and supply firms, and responded positively to national policies and cluster‐governance measures supporting the electronics industry. We found that Japanese firms had clearly moved beyond simple assembly‐based to embedded clustering but had not progressed further to technology‐intensive behavior because of the poor technological environment in Malaysia, as well as Japanese MNCs' strategies that depend on technology from headquarters. Nonetheless, Japanese MNCs were sufficiently embedded in Malaysia to upgrade production to digital consumer products, and semiconductor assembly has flourished, warding off competition from China and low‐cost locations in the Association of Southeast Asian Nations. At the end of the study period, Malaysia remained an attractive location for Japanese electronics MNCs.
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