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Foreign direct investment through acquisitions and implications for technological upgrading: Case evidence from Tanzania

Author

Listed:
  • Portelli, Brian
  • Narula, Rajneesh

    (MERIT)

Abstract

Using a case-study approach, this study examines the role of privatisation on the industrial landscape of Tanzania. We examine the impact of FDI through acquisitions on technology transfer within the acquired firm as well as the development of linkages to other firms based in the host country. Our results suggest that technological upgrading has occurred following FDI, the intensity of which reflects the type of firm-specific assets of parent MNE, as well as the pre-acquisition state of these industrial activities. Improved backward linkages are also evident with local economic agents, but their type and extent – reflecting Tanzania’s comparative advantage in the primary sector - confirm that capabilities both within the acquired firms and also in the industrial base of the host country greatly influence the magnitude and intensity of technological upgrading. ‘Narrower’ technology gaps between the MNE affiliate and the domestic sector are more likely to result in backward linkages and determine the type of technological content of inputs sourced locally rather than within the MNE.

Suggested Citation

  • Portelli, Brian & Narula, Rajneesh, 2004. "Foreign direct investment through acquisitions and implications for technological upgrading: Case evidence from Tanzania," Research Memorandum 008, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:umamer:2004008
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    File URL: https://unu-merit.nl/publications/rmpdf/2004/rm2004-008.pdf
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    Cited by:

    1. Elisa Giuliani & Chiara Macchi, 2014. "Multinational corporations’ economic and human rights impacts on developing countries: a review and research agenda," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(2), pages 479-517.
    2. Lall, Sanjaya & Narula, Rajneesh, 2004. "FDI and its role in economic development: Do we need a new agenda?," Research Memorandum 019, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    3. Otieno Osoro & Patrick Vermeulen & Joris Knoben & Godius Kahyarara, 2016. "Effect of knowledge sources on firm-level innovation in Tanzania," Innovation and Development, Taylor & Francis Journals, vol. 6(2), pages 259-280, July.
    4. Narula, Rajneesh & Portelli, Brian, 2004. "Foreign direct investment and economic development: Opportunities and limitations from a developing country perspective," Research Memorandum 009, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    5. Osoro, Otieno & Kirama, Stephen & Knoben, Joris & Vermeulen, P.A.M., 2015. "Factors Affecting Engagement and Commercialization of Innovation Activities of Firms in Tanzania," Other publications TiSEM 3f542727-8927-424a-8579-2, Tilburg University, School of Economics and Management.

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    Keywords

    economic development an growth ;

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