Abstract
Emerging regionalism in East Asia has been underpinned by the spread of global value chains (GVCs) and free trade agreements (FTAs). Yet there is scant literature on the characteristics of SMEs involved in GVCs and FTAs in East Asian countries. Malaysia is reputed for its engagement in GVCs and is actively pursuing FTAs. Drawing on a survey of Malaysian enterprises, this chapter examines the characteristics of SMEs in GVCs and FTAs, and explores the policy implications. It finds that even among SMEs, firm size matters for participation in GVCs and FTAs. But size is not the whole story for SME internationalisation. Licensing of foreign technology and investment in research and development are also positively associated with SMEs joining GVCs. Furthermore, increased exposure to international trade, knowledge of FTA provisions and central location positively affects the use of FTAs by SMEs. More business support for SMEs can help them to engage in GVCs and FTAs.
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