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World Development Vol. 30, No. 5, pp. 873–889, 2002 Ó 2002 Elsevier Science Ltd. All rights reserved Printed in Great Britain 0305-750X/02/$ - see front matter
PII: S0305-750X(02)00009-8
Clustering of Foreign Direct Investment and Enhanced Technology Transfer: Evidence from Hong Kong Garment Firms in China
EDMUND R. THOMPSON * Ritsumeikau Asia Pacific University, Kyoto/Otia, Japan
Summary. — Separately, both foreign direct investment (FDI) and industry clusters have each received considerable and growing attention in development literature. Each is broadly thought to affect economic growth positively through facilitation of knowledge and technology transfers. But FDI and industry clusters in conjunction have not hitherto been empirically considered specifically with regard to such transfers. This paper does so by examining the proposition that FDI within geographical industry clusters should transfer technology more than FDI that is geographically dispersed. Data are drawn from a quantitative survey of Hong Kong garment firms with manufacturing investments in Mainland China. Clustered FDI is shown to be significantly better than dispersed FDI at transferring technology in certain respects, implying that industry cluster and FDI policies should be considered in tandem rather than separately if developmental benefits from both are to be optimized. Ó 2002 Elsevier Science Ltd. All rights reserved. Key words — foreign direct investment, industry clusters, technology transfer, multinational business, development, China, Hong Kong, garment industry
1. INTRODUCTION The role of foreign direct investment (FDI) has long been a topic attracting wide attention in development literature. Old fears that FDI might sustain, or even accentuate, home and host country income differentials to recipients’ disadvantages (Evans, 1979; Hymer, 1970, 1976; Moran, 1978; Santos, 1970) have mostly given way to recognition that FDI can fuel and facilitate...