Promoting linkage to foreign transnationals in a 'tiger' state: Singapore and the Local Industry Upgrading Programme

Singapore is a key destination for high-technology foreign direct investment in the Asia Pacific, particularly in the areas of disk drives and semiconductors, but increasingly in terms of knowledge-based services. Since the 1980s the government has made strenuous efforts to harness the innovative capacity of foreign transnational corporations through a series of policy initiatives aimed at facilitating a variety of forms of technology transfer to locally owned firms. This paper critically evaluates the impacts of these policy initiatives, and more specifically the Local Industry Upgrading Programme (LIUP), through case studies of the electronics and software sectors. The analysis suggests that supplier upgrading has been limited in the electronics sector, but that horizontal partnership arrangements, as evidenced by the software sector LIUP, may have more beneficial impacts.