Foreign direct investment and regional economic development : backward electronics linkages in Scotland and Singapore
This thesis examines the material linkages generated by electronics foreign direct investment (FDI) in Scotland and Singapore. The reason for undertaking the research owes to the general perception that FDI has not developed strong local supply linkages in Scotland. Given that linkages between multinationals and local suppliers constitute the most important long-term benefit from FDI -in terms of additional employment, technology and skills- this seems worrying for Scotland's long-term economic development. Although FDI has become the standard vehicle ameliorating the industrial restructuring process in less favoured regions, our understanding of linkages remains poor. Recent theoretical discourses within the spatial literature claim organisational change within multinationals is improving the prospects for localised linkages. Critics of this scenario point out that linkage formation in less favoured regions remains weak. In order to assess these diverging claims, empirical informa tion collected using intensive research techniques examines the extent, nature, and quality of linkages generated by a small sample of electronics multinationals in Scotland and Singapore. Findings from empirical material point towards quite low linkage formation in both regions. Although higher linkage levels were found in Singapore, this mainly owed to FDI in Singapore's higher value supply sectors. On the whole linkages tend to be concentrated in low value supply areas such as fabricated metal and plastic parts, particularly in Scotland. These rather limited linkages effects go against the claims made by the localisation school mentioned above. The key causal factors inhibiting local linkage development were examined by scrutinising various plant-level characteristics such as procurement autonomy and design. Inter-plant sourcing differentials reveal that truncated plant autonomy in key areas of decision making responsibility, particularly design, play a significant part in preventing linkage development. In this respect, Singapore's policies towards developing more autonomous design-intensive FDI seems to facilitate local linkage development. In order to to maximise its regional economic potential, the thesis concludes with the need for greater policy intervention towards FDI and ends with specific policy recommendations aimed at increasing linkages in Scotland.