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Offshore Factories and Economic Development: Is There a Path From Sweatshops to Indigenous Innovation?

Offshore Factories and Economic Development: Is There a Path From Sweatshops to Indigenous... Whether or not local economies can benefit from investments that seek to take advantage of a local comparative advantage (e.g., cheap labor) is the question that is addressed in this article. Through multiple case studies of Moroccan companies operating in the textile sector, the paper shows that the link between low labor cost exploitation and economic development is an eclectic phenomenon. The best variable to explain whether or not this link exists is the development of human capital in local factories. The case studies show that suppliers' development initiatives in supply chain management and the vision of local managers/entrepreneurs are more effective mechanisms for growth and development than a “traditional” program of Foreign Direct Investment where knowledge is withheld by the investor. The implications are that management capabilities in emerging economies, such as those of Africa, can be developed even through investments that do not appear, at first sight, to be so appealing for host countries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal Of African Business Taylor & Francis

Offshore Factories and Economic Development: Is There a Path From Sweatshops to Indigenous Innovation?

Leseure, Michel J.
Journal Of African Business , Volume 9 (1): 21 – Jun 6, 2008
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21 pages

Offshore Factories and Economic Development: Is There a Path From Sweatshops to Indigenous Innovation?

Abstract

Whether or not local economies can benefit from investments that seek to take advantage of a local comparative advantage (e.g., cheap labor) is the question that is addressed in this article. Through multiple case studies of Moroccan companies operating in the textile sector, the paper shows that the link between low labor cost exploitation and economic development is an eclectic phenomenon. The best variable to explain whether or not this link exists is the development of human capital in...
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Publisher
Taylor & Francis
Copyright
Copyright The Haworth Press
ISSN
1522-9076
eISSN
1522-8916
DOI
10.1080/15228910802052906
Publisher site
See Article on Publisher Site

Abstract

Whether or not local economies can benefit from investments that seek to take advantage of a local comparative advantage (e.g., cheap labor) is the question that is addressed in this article. Through multiple case studies of Moroccan companies operating in the textile sector, the paper shows that the link between low labor cost exploitation and economic development is an eclectic phenomenon. The best variable to explain whether or not this link exists is the development of human capital in local factories. The case studies show that suppliers' development initiatives in supply chain management and the vision of local managers/entrepreneurs are more effective mechanisms for growth and development than a “traditional” program of Foreign Direct Investment where knowledge is withheld by the investor. The implications are that management capabilities in emerging economies, such as those of Africa, can be developed even through investments that do not appear, at first sight, to be so appealing for host countries.

Journal

Journal Of African Business – Taylor & Francis

Published: Jun 6, 2008

Keywords: Absorptive capacity; economic development; offshore factories; technology diffusion

References

  • How does Foreign Direct Investment Affect Economic Growth?
  • Absorptive Capacity: A New Perspective on Learning and Innovation
  • Introduction to the Symposium Multinationals: The Janus Face of Globalization
  • Global Production Networks, Knowledge Diffusion, and Local Capability Formation
  • Technology Spillovers from Foreign Direct Investment in the Indian Pharmaceutical Industry
  • Measuring Intangible Corporate Assets: Linking Business Strategy with Intellectual Capital
  • The Antecedents of Buying Firms' Efforts to Improve Suppliers.'
  • Indigenous Innovation and Economic Development: Lessons from China's Leap Into the Information Age
  • Host-country Absorption of Technology: Evidence from Automotive Supply Networks in Eastern Europe
  • Developing Knowledge Management Metrics for Measuring Intellectual Capital
  • Industrial Development, Technological Change, and Long-run Growth