Research for this paper was funded in part by a grant from the Fulbright-Hays Doctoral Dissertation Research Abroad Program, with funds provided by the U.S. Department of Education and by a grant from the Social Science Research Council's International Dissertation Field Research Fellowship Program, with funds provided by the Andrew W. Mellon Foundation

I would like to thank Rick Doner, Greg Felker, Stephan Haggard, Allen Hicken, Jomo K.S., Linda Lim, and the participants of the Southeast Asian Business Conference at the University of Michigan and one anonymous reviewer for comments on this and earlier drafts. I am responsible for the errors that remain.

1. As Richard Nelson and Nathan Rosenberg note, innovation is not necessarily creating something totally new, but rather mastering anything that is new to that particular society. Once local firms can assimilate and adopt technologies new to them, they can then focus on creating technologies new to others. See Nelson, Richard R. and Rosenberg, Nathan, “Technical Innovation and National Systems.” In Nelson, Richard R., ed., National Innovation Systems: A Comparative Analysis (Oxford: Oxford University Press, 1993).Google Scholar

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18. The National Computer Board set up a similar program in 1996 to encourage MNCs to share electronics technology with local firms (see Felker, , “Southeast Asian Industrialization,” pp. 255–282).Google Scholar

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36. Ritchie, , “Innovation Systems,” pp. 21–48; see also Felker, , “Southeast Asian Industrialization,” pp. 255–282.Google Scholar

37. The combined average GNP growth of these countries over this period was 5.7 percent, including the period of the downturn, 1996–1999.Google Scholar

38. Rasiah, R., Foreign Capital and Industrialization in Malaysia (New York: St. Martin's Press, 1995). Sapura, for example, has had some success in telecommunications equipment and services. Proton, which recently bought Lotus, has successfully introduced a new engine for a new line of cars.CrossRefGoogle Scholar

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43. To illustrate, only one MNC firm in Salleh's study (p. 150) actually has a formal R&D department, and those that indicated they performed R&D limit their focus to process engineering. The bulk of technology is supplied by the parent company, making only local adaptation of both process and product necessary. The fact that most R&D is done outside Malaysia lessens the need for local technological capacity. But, in a vicious cycle, since most regions of Malaysia have poor stocks of intellectual capital, there is little capacity to increase R&D activities even if the demand were present.Google Scholar

44. Wisarn and Bunluasak argue that the number of Thai firms in their study to achieve a midlevel understanding of MNC technologies was much more limited, and they report that no firms achieved a high level of proficiency. Wisarn, P. and Bunluasak, P., “Foreign Direct Investment and Industrial Restructuring in Thailand.” In Kenkyujo and Institute of Southeast Asian Studies, The New Wave of Foreign Direct Investment in Asia, pp. 111–130.Google Scholar

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56. I am well aware of criticisms directed at the IMD rankings, and, given the proximity of those making the criticisms to the actual processes of data collection and analysis, the criticisms have some validity. But while one might argue that Thailand, for instance, was better (or perhaps worse?!) than the fortieth through thirty-fourth rankings it received, the scale does do a fairly good job at capturing the overall competitive position of the economy.Google Scholar

57. Between 1997 and 2000, Seagate shut down two plants in Malaysia and one in Thailand. Over this period, it reduced its Malaysian workforce from a high of 24,000 to just 5,500; its Singaporean workforce from a high of 20,000 to just over 9,000; and its Thai workforce from over 40,000 to around 18,000. Concurrently, the size of its Chinese workforce ballooned to more than 20,000.Google Scholar

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61. These functions used to be carried out by the Productivity and Standards Board before its responsibilities were divided among a number of ministries.Google Scholar

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66. See the Singapore Ministry of Manpower's Manpower 21 plan as an example.Google Scholar

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76. I am not arguing that Singapore is without the possibility of institutional dead ends. For example, much is being made of the negative influence repressive political institutions might be having on entrepreneurial capacities, which dramatically lag behind the OECD countries. Moreover, others, like Natasha Hamilton-Hart, are arguing that relationships between large government-linked corporations and favored politicians and businesspeople are not as transparent or arm's-length as most imagine. See Hamilton-Hart, N., “The Singapore State Revisited,” Pacific Review 13, no. 2 (2000): 195–216.Google Scholar

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