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Changes in Trade Policies and the Heterogeneity of Domestic and Multinational Firms’ Strategic Response: The Effects on Firm-Level Capabilities

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  • Peerally, Jahan Ara
  • Cantwell, John A

Abstract

After the Multi-Fiber Agreement ended in 2005, most Asian-owned subsidiaries exited the Mauritius export processing zone (MEPZ), while most European-owned subsidiaries and domestic firms remained and further integrated their presence in the MEPZ. Based on the heterogeneity of their strategic response to changes in trade policies, we hypothesize that Asian-owned subsidiaries did not, during their operating life-time in the MEPZ, actively engage in creating technological capabilities when compared to their European-owned and domestic counterparts. Our results support our hypothesis and we discuss their serious implications for other Sub-Saharan African textile-based EPZs in connection to the African Growth and Opportunity Act.

Suggested Citation

  • Peerally, Jahan Ara & Cantwell, John A, 2012. "Changes in Trade Policies and the Heterogeneity of Domestic and Multinational Firms’ Strategic Response: The Effects on Firm-Level Capabilities," World Development, Elsevier, vol. 40(3), pages 469-485.
    • Handle: RePEc:eee:wdevel:v:40:y:2012:i:3:p:469-485
    DOI: 10.1016/j.worlddev.2011.09.020
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    2. Badi H. Baltagi & Peter H. Egger & Michaela Kesina, 2016. "Firm‐Level Productivity Spillovers in China's Chemical Industry: A Spatial Hausman‐Taylor Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 31(1), pages 214-248, January.
    3. Figueiredo, Paulo N. & Larsen, Henrik & Hansen, Ulrich E., 2020. "The role of interactive learning in innovation capability building in multinational subsidiaries: A micro-level study of biotechnology in Brazil," Research Policy, Elsevier, vol. 49(6).
    4. Rasiah, Rajah & Shahrivar, Rafat Beigpoor & Yap, Xiao-Shan, 2016. "Institutional support, innovation capabilities and exports: Evidence from the semiconductor industry in Taiwan," Technological Forecasting and Social Change, Elsevier, vol. 109(C), pages 69-75.

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