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OECD Development Centre Articles
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CONCLUSION: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES - Click To Read Article The level of human capital in developing countries has on average improved over the past three decades, owing to enhanced government commitments in formal education and vocational training as well as increased incentives of firms to provide enterprise training. Questions Posed: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES - Click To Read Article The following lists key policy questions on HRD and FDI to be tackled throughout the paper. All the questions will be reviewed and assessed in the concluding chapter. SMEs in Africa: the “Missing Middle” - Click To Read Article The development of the private sector varies greatly throughout Africa. SMEs are flourishing in South Africa, Mauritius and North Africa, thanks to fairly modern financial systems and clear government policies in favour of private enterprise. Elsewhere the rise of a small-business class has been hindered by political instability or strong dependence on a few raw materials. The Efficiency and Labour Market Impact Have Varied Across Sectors - Click To Read Article In the competitive manufacturing and tradable services sectors, efficiency gains, defined as improved performance of the company, have been generally achieved with wide variations in performance across firms and countries. Technology Transfer through Training Spillovers - Click To Read Article HRD activities conducted by the MNEs have proven to be important for host developing countries since domestic firms are more likely to face training constraints due to market failure. MNE training is also important since it is most likely to bring in the advanced skills and technologies to which domestic firms otherwise have no access. One important channel through which this technology may transfer from MNEs to domestic firms is the so-called training spillovers. BIBLIOGRAPHY - E-COMMERCE FOR DEVELOPMENT: PROSPECTS AND POLICY ISSUES - Click To Read Article References A Limited Impact on Private Sector Development - Click To Read Article Since the beginning of the process in 1990, the number of privatisations through public flotation has been only 4 per cent of total transactions. Moreover, the trend is downward, confirming the difficulty in African countries of building stock exchanges and capital markets, still often used by governments to raise loan finance rather than capital for industry. Attracting Service Sector MNEs - Click To Read Article As shown in section II.2, services sector FDI has been a growing area in the past 15 years. Since the service sector FDI, in general, involves high value-added MNEs that possess knowledge and technology, host developing countries may want to mobilise their human resources so as to attract these types of MNEs. While not all servicesrelated MNEs require high-skilled workers, some of the growing services-related MNEs do actually require a high-skilled workforce. They include MNEs operating in the area of financial services, information technology, telecommunication, pharmaceutical, medical, as well as firms that locate regional headquarters in the host country. Preface - E-COMMERCE FOR DEVELOPMENT: PROSPECTS AND POLICY ISSUES - Click To Read Article The OECD has been a pioneer in addressing the challenges and opportunities of electronic commerce and the digital economy in the industrialised countries. It is natural then that the Development Centre should assess the scope for e-commerce in developing countries. But like the sailors in the strait of Messina, the research should avoid at once the scylla of technological pessimism — seeing an inevitably widening “digital divide” between industrialised and developing countries — and the charybdis of exaggerated claims about the Internet’s potential to resolve a host of development problems that have heretofore proved intractable. Restricted Access to Finance - Click To Read Article Africa’s SMEs have little access to finance, which thus hampers their emergence and eventual growth. Their main sources of capital are their retained earnings and informal savings and loan associations (tontines), which are unpredictable, not very secure and have little scope for risk sharing because of their regional or sectoral focus. HUMAN CAPITAL FORMATION BY MNES AND TECHNOLOGY TRANSFERS - Click To Read Article The previous section examined the role of host countries in attracting inward FDI and found that efforts to develop an attractive investment climate supported by sound policy reforms in HRD would help open doors to inward FDI. This section focuses on what host countries can do next to mobilise these MNEs to strengthen HRD further. Proper Regulation Is Crucial to Ensure Welfare Gains - Click To Read Article The effects of privatisation on living conditions of the population, and, in particular, on improved access and quality, are mixed and depend on the regulatory framework in place and the capacity of the state to co-operate with the private sector. In particular, the impact of privatisation policies on the welfare of the population and ultimately on the poor requires: HUMAN RESOURCE DEVELOPMENT AND ATTRACTING INWARD FDI - Click To Read Article One of the characteristics of rich industrial economies is the availability of a workforce with a high level of human capital. Whether human capital has been the key driver of economic prosperity or vice-versa is still a matter of debate. Nevertheless, long time series trends in educational attainment and economic growth during the last century indicate that HRD and economic prosperity went hand in hand10. Some developing countries followed similar trends in human capital and economic growth. What was distinctive about these developing countries is that they appeared to have realised large economic benefits in attracting MNEs into host economies, and have thus mobilised inward FDI to attain rapid economic growth. Improving Management of Oil Revenue during Periods of Price Booms - Click To Read Article With more than 100 billion barrels, Africa had 9 per cent of the world’s oil reserves by the end of 2003. Half are located in North Africa. In sub-Saharan Africa, the oil-producing countries can be divided into three categories: the old ones where production is in decline (Congo, Cameroon and Gabon); those where production is still on the increase (Angola, Nigeria); and the new members of the club (Equatorial Guinea, Chad and São Tomé and Principe). However, most of these countries have suffered from the “oil curse” finding themselves heavily indebted and impoverished. Expanding the supply of finance through the non-financial private sector - Increasing SME Access to Finance: A Four Pronged Approach - Click To Read Article Financial institutions are not the only source of money for SMEs. Apart from remittances by nationals working abroad, which are a key boost to private-sector growth, the interdependence between SMEs, large firms and sectoral “clusters” is a major potential source of finance, as shown in Asia and Latin America. Sectoral Trends of FDI in Developing Countries: Background - Click To Read Article The recent waves of globalisation have substantially transformed the modes of production and trade in both developed and developing countries. This is reflected in the changes in the extent of information and technology in the workplace, firm’s production and organisational strategies, trade and FDI liberalisation policies, and new rules of international trade and investment. Given these developments, the sectoral trends (primary, manufacturing and services) in FDI have changed rapidly over the past two decades. Preface: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES - Click To Read Article The main theme for the programme of work 2001-2002 at the Development Centre was Globalisation and Governance. Multinational enterprises (MNEs) are a key actor of globalisation and also raise numerous governance issues. Accordingly, their role in poor countries has always interested the development community Policies to Develop Human Resources - Click To Read Article Now that the importance of human capital in attracting FDI is understood, the next question is: what are the past HRD policy experiences of host developing countries that have strived to attract inward FDI? This section focuses on formal education policies to attract FDI. While vocational training policies also help improve human resources of host developing countries, they are likely to be more important after some influx of FDI into the economy. Policies to Facilitate a Virtuous Circle - Click To Read Article There are only limited experiences of host countries that have succeeded in continuously attracting FDI while effectively moving-up the value chains through solid HRD and technology transfers. Human Capital Formation by MNEs: Supporting Formal Education - Click To Read Article While training is no doubt the major source of HRD activities undertaken by the MNEs, they can also contribute to the HRD of host developing countries by mobilising formal education. One of the MNEs that has invested substantially in formal education is Intel. They have invested in curriculum, educational equipment, infrastructure and technical support to almost all countries where they have production facilities, including Argentina, Brazil, Costa Rica, China, Malaysia, South Korea, India, Russia, Poland, Ireland and South Africa. Abstract - E-COMMERCE FOR DEVELOPMENT: PROSPECTS AND POLICY ISSUES - Click To Read Article In this paper, we analyse the potential contribution of the Internet and its commercial application to the development process in poor countries. In historical perspective, the Internet has diffused at a far faster rate than earlier generations of communications technology: from 1990 to early 2000, the estimated number of Internet users grew more than tenfold to roughly 300 million, affecting the way in which people communicate with each other, acquire information, learn, do business, and interact culturally. Our particular focus is on the opportunities e-commerce offers to small-scale entrepreneurs in developing countries and the challenges they face in exploiting e-commerce’s potential. Facts about SMEs in Africa - Click To Read Article Very few countries have working definitions of SMEs, except some members of UEMOA/WAEMU and Mauritius and Morocco. So data on this is hard to compare, though patterns can be seen and countries can be ranked by extent of SME activity: African Economic Performance in 2004: A Promise of Things to Come? - Click To Read Article Against a backdrop of sustained global growth and high commodity prices, Africa has experienced its best economic performance in many years. While recent economic performance is not merely driven by favourable external factors, African economies still lack proper “shock-absorbers” to withstand internal (e.g. drought and floods, political instability, HIV-Aids, etc.) and external (e.g. volatility of commodity prices and exchange rates) shocks alike. They remain strongly vulnerable. In this context, creating the conditions for the development of indigenous drivers of economic activity (starting with a thriving local private sector) is a top priority. Trends in FDI in Developing Countries: Background - Click To Read Article During the past two decades, a number of developing countries witnessed a growing importance of FDI as the primary source of financial capital flows into their economy. FDI brings not only increased access to foreign exchange, trade and employment, but also new products, information and technology. It is no coincidence that this rapid growth of FDI was accompanied by an increase in the level of human capital. The latter was achieved by strong government commitments to expand formal education and vocational training along with improved enterprise efforts to improve training opportunities for workers. This section looks at recent trends in both FDI and HRD in order to highlight the magnitude of this issue as well as to explain some of the key issues raised in this paper. Improving business conditions - Increasing SME Access to Finance: A Four Pronged Approach - Click To Read Article Improving business conditions, boosting the capacity of SMEs, expanding the financial sector and strengthening links between firms will permanently increase SMEs’ access to finance. Africa and its International Environment: Taking up the Challenges of Aid Quality and Competitiveness - Click To Read Article Aid flows need to increase, but aid also needs to be more effective! V. INSTITUTIONAL AND POLICY REQUIREMENTS FOR E-COMMERCE DEVELOPMENT - Click To Read Article Even assuming the physical infrastructure bottlenecks to Internet expansion are overcome and access prices become more affordable in developing countries, a number of other significant policy challenges must be met if governments are to create an environment conducive to e-commerce. Summary: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES - Click To Read Article This paper synthesises the existing literature on human capital formation and foreign direct investment (FDI) in developing countries. III. E-COMMERCE AND SMALL ENTREPRENEURS - Click To Read Article The share of value added that potentially lends itself to electronic commerce represents around 30 per cent of GDP, most importantly distribution, finance, and business services (Pérez-Esteve and Schuknecht, 1999). E-commerce is also likely to boost international flows of many services significantly. VI. NEW CHALLENGES FOR SOCIETIES AND DEVELOPMENT ASSISTANCE - Click To Read Article The current ICT-centred technological revolution, of which the Internet is but one manifestation, is reshaping not only the sphere of economic organisation but also, and relatedly, the sphere of social relations. The impact is likely to be at least as great in developing countries as in OECD ones. Introduction: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES - Click To Read Article Human resource development (HRD) and foreign direct investment (FDI) are among the key drivers of growth in developed and developing countries. III.c. Linking into B2B Supply Chains: E-COMMERCE AND SMALL ENTREPRENEURS - Click To Read Article For countries undergoing rapid structural transformation, the expansion of industrial employment still holds vast potential for raising living standards of the poor. To what extent can the Internet and e-commerce serve to raise productivity and competitiveness in the industrial sectors of developing countries? Human Capital Formation by MNEs and Domestic Firms: Determinants of Enterprise Training - Click To Read Article It is a general understanding that firms in general underinvest in training in both developing and developed countries (Batra and Tan, 2002; OECD, 2003; OECD, forthcoming). III.d. E-Commerce in the Service Sector: E-COMMERCE AND SMALL ENTREPRENEURS - Click To Read Article Certain segments of the service sector are especially amenable to the introduction of ICT, to the establishment of a Web presence, and to transacting business electronically. I. INTERNET AND THE DIGITAL ECONOMY - Click To Read Article The past few years have seen an explosion of attention to the role played by information and communications technology (ICT) in shaping the global economic landscape (OECD, 2000a)1. On the supply side, contributing factors include the development and introduction of new and improved products through firm-level investments in R&D and innovation, the ready availability of venture capital funds for investments in ICT, the development and rapid growth of new products/services segments, and the general shift towards services Determinants of Enterprise Training: What are the Training Constraints? - Click To Read Article Enterprise Surveys have shown that large variances in training incidence exist across firms. A natural question then is why do certain firms invest more in training and others do not. There is a certain amount of cross-country and individual country evidence in the literature to identify why this is the case. VII. CONCLUSION - E-COMMERCE FOR DEVELOPMENT: PROSPECTS AND POLICY ISSUES - Click To Read Article What have we learned about the potential that ICT and e-commerce hold for poor countries? While the danger of hyperbole looms large, e-commerce does present real opportunities to small entrepreneurs in developing countries. Privatisation: A Challenge for Sub-Saharan Africa - Click To Read Article Thirty-eight sub-Saharan African countries have implemented privatisation programmes, following the mid-1980s pattern in the OECD countries: privatisations of small and medium-sized enterprises in the early 1990s; and larger enterprises, including, companies in the utilities sector, by the mid-1990s. HRD Policies to Promote Training and Spillovers - Click To Read Article The above assessment of selected past empirical evidence suggests that firms, in spite of large productivity gains, underinvest in training due to market failures such as credit market constraints, lack of information and labour turnovers. The underinvestment is even more acute among small- and medium-sized domestic firms that tend to have higher productivity gains from training compared to MNEs or large domestic firms. It has also shown that MNEs have numerous channels to improve HRD in host developing countries by training their own workers and facilitating training spillovers. This calls for policy measures to tackle market failures in training and to stimulate training spillovers, especially among domestic small- and medium-sized firms. Empirical Evidence: Does Human Capital Matter? - Click To Read Article Although the theoretical literature on FDI presumes human capital to be among the key ingredients of inward FDI (Dunning, 1988; Lucas, 1990; and Zhang and Markusen, 1999), there are only few cross-country analyses done to identify the determinants of inward FDI in developing countries. The Rise of China and India: What's in it for Africa? - Click To Read Article China’s and India’s strong appetite for energy and metal has boosted international prices and the volume and value of African exports. Helping SMEs meet the requirements of formal financing - Increasing SME Access to Finance: A Four Pronged Approach - Click To Read Article Apart from the need to boost SME capacities, some financial instruments can help provide missing information or reduce the risk stemming from some SMEs’ lack of transparency. II. INTERNET AND THE DEVELOPMENT PROCESS - Click To Read Article The Internet and ICT more generally are new tools for information acquisition, processing, analysis, and transmission, but information is the underlying resource of value to entrepreneurs. Based on surveys of small- or medium-sized enterprises (SMEs) in developing countries, four types of information appear to be especially valuable: Solid Growth in Sight, but There Are Risks - Click To Read Article Solid growth is expected to continue in 2005 and 2006 – although at a slightly lower rate of 4.7 per cent in 2005 as the effect of new Central African oil fields ends. West Africa is expected to recover in 2005 and 2006, while the trend of positive growth in Eastern Africa and Southern Africa will continue over the next two years, reflecting rising oil production in Angola and improved performance in South Africa. This positive outlook is however highly dependent on the continuous expansion of the global economy, an overall easing of regional conflicts, and favourable weather conditions. Lessons Learned - Click To Read Article The privatisation process in Africa is still far from complete and has led to mixed results. The successful cases of the Compagnie Ivorienne d’Electricité, Sonatel, and Société d’Energie et d’Eau du Gabon can not hide the dramatic failures. Making the financial system more accessible to SMEs - Increasing SME Access to Finance: A Four Pronged Approach - Click To Read Article Most African financial systems are fragmented. The “missing middle” in the pattern of size of firm is matched by one in the range of financing available. Prospects of Human Capital in the Future: Background - Click To Read Article Future prospects of human capital development can be seen from the current trends in education among the children as well as the training efforts made in enterprises. Has Privatisation Benefited the Poor? - Click To Read Article Privatisation is often considered detrimental to the poor because it entails the elimination of subsidies and therefore the increase in prices of products and services needed by the poor, such as water, electricity and public transportation. III.b. E-Commerce and Primary Commodity Markets: E-COMMERCE AND SMALL ENTREPRENEURS - Click To Read Article Most low-income developing countries continue to be primary commodity exporters (including oil, gas and other minerals, and agricultural products). Thus, short of wholesale diversification into manufactures and services, their immediate interest is in how e-commerce may affect competitiveness in their traditional export markets. V.b. The International Dimension of Internet Regulation: Taxes and Domain Names - Click To Read Article The intersection of a global, multipurpose medium, the Internet, with systems designed for the physical, territorial world poses further policy questions. African Reforms are essential to Boost Private-sector Development and Improve Governance - Click To Read Article The capacity of smoothing shocks highly depends on the ability of African policy makers to diversify their economies. Boosting the private sector and improving economic and political governance are crucial. THE VIRTUOUS CIRCLE OF HUMAN CAPITAL FORMATION, INWARD FDI, AND TECHNOLOGY TRANSFERS - Click To Read Article The past two sections described how host developing countries attract MNEs. It is found that while basic education for all adults is the key starting point, a demand driven HRD at a higher level is necessary to attract higher value-added MNEs including those in the recently growing services sector. IV. RELIEVING INFRASTRUCTURE BOTTLENECKS, ENCOURAGING ISPs AND REDUCING ACCESS COSTS - Click To Read Article A country’s readiness for e-commerce depends fundamentally on network infrastructure, including narrow and broadband, and on costs of Internet access. The quality and range of services available depends on the emergence of innovative Internet service providers (ISPs). Macroeconomic “Shock-absorbers” for Africa - Click To Read Article The need for further fiscal consolidation III.a. B2C E-Commerce: E-COMMERCE AND SMALL ENTREPRENEURS - Click To Read Article To date, much discussion has focused on B2C applications for OECD entrepreneurs, but there is growing evidence of a significant potential for developing countries, notably artisans in traditionally low technology sectors. Does Availability of Educated Workers Increase Enterprise Training? - Click To Read Article A number of studies have addressed the issue of whether educated employees are more likely to receive enterprise training. Since productivity gains of training activities among educated workers are expected to be higher, firms with a higher proportion of educated workforce are more likely to provide training. Do MNEs Train More than Domestic Firms? - Click To Read Article Most empirical findings confirm this by using variables representing foreign ownership. Tan and Batra (1996), Tan and Lopez-Acevedo (2003), and Miyamoto and Todo (2003) show that higher foreign equity share is indeed an important determinant of training in Mexico, Indonesia and Malaysia. Why do MNEs train more than domestic firms? V.a. Weaving a Web of Trust: Consumer Protection and Competition Policy - Click To Read Article Trust is needed at many levels, including hardware and software security, the regulatory regime, familiarity and users’ perceptions. Factors affecting the level of trust required and provided include: BIBLIOGRAPHY: HUMAN CAPITAL FORMATION AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES - Click To Read Article References Like this article? Share it with your friends
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