Routes to technological learning and development

In this article we review the range of policy options pursued by national governments for generating innovation within domestic firms. Against this context we examine Malaysia's formal policies for technology acquisition and their implementation. Our analysis draws on an assessment of formal government policy, interviews at public organisations responsible for the implementation of policy, and private domestic and transnational firms, which are active in the target sectors. In total, thirty private and public organisations were visited. It is clear that the Malaysian government has developed a coherent set of policies, which aim to move the economy from its current focus on manufacturing to higher value-added activities such as research and development (R&D), marketing, and distribution. However, we found little evidence of the implementation of such aspirations. In almost all cases transnational companies have confined Malaysian subsidiaries to manufacturing activities, albeit in ''high-technology'' sectors, and have located development and marketing functions overseas. In fact, growth of value-added and capital intensity have been lower in those sectors dominated by FDI, than in other sectors. Nevertheless, there are isolated cases of indigenous companies which have been able to exploit joint ventures as an opportunity for learning from overseas companies, and this approach appears to offer greater opportunity for achieving the Malaysian government's objectives.