Abstract
This paper uses the evolutionary framework to examine the relationship between ownership, technological capabilities and export intensities using garment manufacturing in the Least Developed Country of Myanmar as an empirical case. The results show that foreign firms with production connected to global value chains enjoy higher export intensity than national firms even when controlled for age. Also, foreign firms with access to superior support from parent plants enjoy higher technology capability than national firms even after controlling for age. The Levene's two-tail ‘t’ tests show that foreign firms also enjoyed higher human resource, process technology and adaptive capabilities than national firms. Foreign firms are also larger and pay higher wages than national firms. The results show that foreign firms’ superior market access and technological capabilities can offer the potential for knowledge spillover to national firms provided the government stabilizes the political situation and strengthens the basic and high technology infrastructure in Myanmar. Unlike the Maquiladoras of Latin America, not only that a quarter of the inputs are sourced by garment firms from Myanmar, a handful of national firms have already acquired the export and technological capabilities to compete with foreign firms.
Highlights
Myanmar is the second largest country in Southeast Asia after Indonesia, sharing borders with Bangladesh, India, China, Laos and Thailand
The sampled firms show that foreign firms are more export-oriented with minimum and maximum export intensities ranging from 60% to 100% while that of national firms ranged from 20% to 100% (Table 3)
It can be seen that the garment industry, which began to contract initially from economic sanctions imposed by the United States in 2003, has continued to operate in Myanmar
Summary
Myanmar is the second largest country in Southeast Asia after Indonesia, sharing borders with Bangladesh, India, China, Laos and Thailand. Further efforts at increasing the scope of private sector activity included: permission for the opening of private commercial banks, lifting of restrictions on trade, foreign equity, improvements in the legal and regulatory framework, physical infrastructure and the establishment of industrial zones after the promulgation of the Private Industrial Enterprise Law in 1990 These developments stimulated a massive expansion in garment manufacturing, which accounted for 48.6% of overall exports of Myanmar in 2000 (WTO 2012). Higher export and technological capabilities in foreign firms can offer national firms the potential of learning through demonstration effect and the hiring of experienced personnel from the former The realization of such a potential by national firms in a LDC will depend on the capacity of the embedding institutions, which as Hirschman (1970) had noted, will rest considerably on the policies of the host-government.
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