Foreign Ownership, Technological Capabilities and Exports: Evidence from 205 Clothing Firms in Sri Lanka
Ganeshan Wignaraja
#2006-032
Sri Lanka was the earliest South Asian economy to introduce economic
reforms to attract export-oriented FDI. The rise of clothing production
for export, apparently mainly driven by foreign firms, is regarded as a
major outcome of the reforms. This paper seeks to examine a range of
factors underlying firm-level export and technological performance.
Econometric analysis (based on a large dataset of 205 clothing
enterprises) indicates that foreign ownership, firm size, human capital,
technological capabilities and geographical location are all positively
associated with export shares. Furthermore, higher levels of
technological capability are associated with larger firm size,
university-level manpower and formal research and development. Improving
the country's investment climate, facilitating the development of
business services markets and upgrading SMEs as subcontractors to
foreign firms are important policy lessons for developing economies
UNU-MERIT Working Papers
ISSN 1871-9872