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What causes firm-level product innovation in developing economies? This paper answers this question by emphasizing the role of process improvements that are influential in product innovation. We construct a firm-level innovative capability score using novel, broad-based, but detailed data on various process improvement practices obtained from firms in Southeast Asia. We then investigate the factors that may affect innovative capability. We also estimate the effect of the innovative capability score on product innovation controlling for research and development intensity and other firm characteristics. Our empirical investigation identifies a chief executive officer ( CEO)'s past experience at a foreign or large firm, and buyer pressure to adopt international standards as key determinants of innovative capability. Novel and unique findings from our examination include: ( i) the impact of a CEO's past experience at a foreign or large firm on the innovative capability is larger for local enterprises and small- and medium-sized enterprises; ( ii) the impact of share of foreign workers in the upper managerial levels only appears to be significant in foreign firms and larger firms; and ( iii) buyer pressure is a more likely contributor to innovative capability compared with capital tie-ups with multinational enterprises or joint venture buyers that capture vertical technology transfers. Finally, our empirical results show that a firm in Southeast Asia is more likely to achieve product innovation if the firm has had a higher innovative capability. [ABSTRACT FROM AUTHOR]

This paper studies the trends in foreign direct investment (FDI) flows into selected South-East Asian and East Asian economies after the Asian crisis. Empirical evidence indicates that South-East and East Asian economies are recovering from the Asian crisis with strong output growth driven largely by export growth. However, output growth in the post-crisis period is also accompanied by rising unemployment rates, growing government deficits, and declining FDI inflows into the South-East Asian region. The declining FDI inflows into South-East Asia after the crisis is of concern, as our empirical results show that FDI is important for output growth in the region. Our results also suggest that there might have been structural changes in the regional economies that could have led to a downward shift in the output growth of Asian economies in the post-crisis period. This raises the issue of the sustainability of their output growth in the post-crisis period. [ABSTRACT FROM AUTHOR]

The Tracking Development project aims to explain the divergences in development outcomes in sub-Saharan Africa and South-East Asia over the past fifty years through the pair-wise comparison of four countries in each region. The development trajectories in South-East Asia revealed that the transition to sustained growth has consistently been associated with policies aimed at (i) macroeconomic stabilisation; (ii) improving life in the rural sector, increasing agricultural productivity and ensuring an ample supply of food; and (iii) liberalising the economy and creating conditions of economic freedom, particularly for peasant farmers and other small actors. In Africa, initiatives in these directions have been taken in some instances, but the simultaneous pursuit of all three policy objectives has not occurred. Most noticeably, policies aimed at macroeconomic stabilisation were pursued in both regions, but whereas in South-East Asia these were associated with policies leading to poverty reduction, this was not the case in Africa. [ABSTRACT FROM AUTHOR]