IKMAS Seminar Series No.13/2016

Title: Industrial Transformation with Heterogeneous Labour and Foreign Experts
Date : 24th August 2016 (Monday)
Time : 2.30PM-4.30PM
Speaker: Mr King Yoong Lim (School of Social Sciences, University of Manchester)

Synopsis:

This paper develops an imitation-innovation model with heterogeneous labour and foreign MNCs to examine industrial transformation for a developing host economy. With FDI modelled at the disaggregated level of foreign experts, we formalise a MNC composition determination framework that explains Dunning’s ’internalisation advantage’ as being driven by the presence of asymmetric views on productivity of domestic workers. Specifically, foreign experts perceive heterogeneity among the productivity of domestic workers. As productivity is a transformation of ability, this allows us to link the skills acquisition decision and foreign subsidiaries ’operational mode choice along the same ability distribution in the host economy. Calibrated for Malaysia, the model produces simulation results consistent with some stylised observations documented in FDI literature, and uncover complementarities between human capital and FDI-promoting policies. These complementarities are stronger with endogenous technological change.
JEL Classification Numbers: F23, O14, O33, O41.
Keywords: Foreign Experts, Human Capital, Industrial Transformation, Innovation.

About the Speaker:

Mr. Lim is a member of the Centre for Growth and Business Cycle Research (CGBCR), University of Manchester, and currently is in the final year of his PhD programme working with the renowned Development Macroeconomist, Professor Pierre-Richard Agénor. Prior to Manchester, Mr. Lim was an economist with the research arms of Securities Commission Malaysia and Khazanah Nasional. This period saw him contributed to the drafting of Malaysia’s Capital Market Masterplan 2, the National Innovation Strategy and its associated GLC Innovation Transformation Programme, as well as being appointed as a Short-term Consultant in a macro-modelling project with a regional office in the World Bank Group. Mr. Lim is also the co-author of the book, “Can Malaysia Achieve Innovation-led Growth?” published by Khazanah Nasional in 2013.