Local Firms

Abstract

In the preceding chapter we examined the development of direct linkages from the angle of AA and BA. This has been the prime method used by economists to assess linkage effects of individual firms. Such methods, though important, neither reveal sufficiently their relevance to local firms, nor reflect adequately the impact of foreign firms on local firms. Thus, we examine here linkages from the perspective of local firms, confining analysis to dynamic influences; i.e. machine tool purchases, intermediate fibre and fabric sales, and human capital transfers. As governments often influence the organization of industry, the last section assesses their role in the development of links between foreign and local firms.