Global Export Strategy: High Technology Transfer Model for Accelerating Developing Country Growth

By Vambery, Robert G.; Tae, Yun Um | Multinational Business Review, Fall 1993 | Go to article overview

Global Export Strategy: High Technology Transfer Model for Accelerating Developing Country Growth


Vambery, Robert G., Tae, Yun Um, Multinational Business Review


The geographic spread of multinational corporations continues to undermine the confidence of less developed and developing countries in their ability to benefit from the internationalization and globalization of markets. Theoretical and conceptual constructs offered during 1965-1990 helped to indicate that these concerns were exaggerated. Trade barriers such as large capital investments, advanced technology, high costs of licensing and requirements for educated labor forces could be overcome by both less developed and developing country corporations. This paper brings together conceptual models with statistical evidence of economic development and rising industrial output to shed additional light on methods and opportunities for increased involvement in the international production and trade activities of globalized markets.

INTRODUCTION

Currently, developed country corporations are concerned with the economic growth of the newly industrialized nations of Taiwan, Hong Kong, Singapore, and Korea. These countries achieved significant economic improvements through export driven growth policies. They have grown from economies based on textile industries to economies based on high technology industries. They followed patterns of development similar to those of Japan. To understand this pattern it is useful to look at these Asian countries in terns of export strategies and in terms of high-technology industries.

EXPORT STRATEGY MODEL FOR DEVELOPING COUNTRIES

The Export Strategy Model for developing countries is related to the international product life cycle (IPLC) model. The international product life cycle model created by Raymond Vernon, was developed from an economic perspective. Later, Louis T. Wells, Jr., SAK Onkvisit, and John J. Shaw applied Vernon's theory to marketing strategy.

The international product life cycle can be divided into four phases: export strength, introduction of foreign production into the developing countries, increased competitiveness of foreign production, and import competition in the developed countries. The international product life cycle model explains the transfer of production competitiveness from developed countries to the less developed countries (LDCs). In other words, the IPLC model suggests that many products go through a cycle during which high-income, mass-consumption countries initially export products. They eventually lose their export markets and become importers of those same products.

The IPLC model's view concentrates on the perspective of developed countries. In addition, the

model fails to explain the step beyond the importing phase, an important step for the developing country. To overcome this weakness in the international product life cycle model, it is possible to examine the fourth phase in which the developing country becomes an exporter.

In the second phase of the IPLC model, the developed country sets up an assembly plant in the less developed country (LDC), where labor is less expensive. In the third phase, the LDC an increase its export volume by implementing an original equipment manufacturing (OEM) export strategy.

The "OEM export strategy" for a developing country is oriented toward attracting production contracts from developed countries: The developing country producer manufacturers products for companies in developing countries. The finished products will be marketed internationally under the brand names of the established developing country corporations. The transition from the third phase to the fourth phase marks a significant movement between the less developed countries and developing countries. Because of increased exports and industrialization, the LDCs could reach the same economic level as the developing countries. In the fourth phase, the developing countries cope with increased Competition by emphasizing their marketing strategies. The next step, for developing countries, would be to recognize the importance of brand names as well as of localized marketing. …

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Global Export Strategy: High Technology Transfer Model for Accelerating Developing Country Growth
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