"In a scenario of heightened international competition among firms and intensifying competition among locations for investment projects, the question of how success can be attained and maintained is of crucial importance", asserts Karl P. Sauvant, the editor of Transnational Corporations, a refereed journal published three times a year by UNCTAD. In his introduction to volume 11, number 3 of that journal, he stresses that the convergence of topics in this issue around the interface between foreign direct investment (FDI), competitiveness and technology is not an accident. Leading scholars are closely following the emerging patterns of the world economy and the challenges they raise.
The first article, written by Professors John H. Dunning of the University of Reading and Alison McKaig-Berliner of the State University of New Jersey at Rutgers, analyses the competitiveness question from a firm perspective and in one services industry - professional business services. Given the growing importance of services in economic activities and their increasing tradeability, an empirical enquiry into how these developments affect the sources of competitiveness is quite timely. The authors conducted an original field study of the sources of competitiveness for 96 professional business service firms. Among its major findings is that the propensity of firms to access competitive advantages from foreign locations is positively related to the degree of transnationality and varies according to the country of origin and form of FDI.
In the second article, Prof. Sanjaya Lall of the University of Oxford investigates the sources of competitiveness for developing locations and the role Governments can play in enhancing that competitiveness. The article addresses the competitiveness question in terms of the role of FDI in technology transfer and learning. It highlights the important role that FDI can play in the transfer of technology but emphasizes that technology transfer should be maximized and complemented by appropriate country policies. It presents the success achieved by South-East Asian economies as a benchmark for economic and policy analysis. Lall concludes that there is no single path to competitive success; rather, there are diverse paths followed by different countries.
The third article, by Prof. Rajah Rasiah of the Institute for New Technologies of the United Nations University, provides further details on how government policies can (or cannot) enhance competitiveness. The relevance of his analysis comes from the contrasting cases he presents of two locations within the same country, Malaysia: Penang (a success story), and Klang Valley (a less successful case). This underlines the importance of subnational entities in providing the right type of assistance to competitiveness. The author focuses on the development of human capital in both locations through formal education and learning-by-doing. Different types of systemic coordination at the local level have produced different levels of network synergies in the two locations. Stronger systemic coordination and network cohesion stimulated greater differentiation and division of labour in Penang, while weak systemic coordination and network cohesion confined transnational corporations to largely truncated operations without significant levels of differentiation and division of labour in Klang Valley.
This issue of Transnational Corporations also contains the Overview of the World Investment Report 2002 (see www.unctad.org/wir and UNCTAD press releases TAD/INF/PR/54 and 55 of 17 Sept. 2002), which provides a wide range of background information on the current dynamics of the world economy. In addition, it features the consolidated indices of all articles, research notes, views, review essays, review articles and book reviews published in the Journal over the past 11 years.
