ABSTRACT
This chapter examines the impact of Japanese Foreign Direct Investment in the form of technology transfers upon Malaysia's industrialization. It demonstrates that the tightly organized structure of the Japanese multinational companies, their subsidiaries, and indeed their whole keiretsu network is having a negative impact upon the nature and extent of technology transfers to Malaysia. While the bulk of Japanese technology in Malaysia is transferred from parent company to subsidiary, the technological needs of the subsidiary are limited, however, only to the production know-how for the specific task it performs, rather than for the entire product or for its design. The chapter offers some policy recommendations to Malaysia and other developing countries on how to benefit more fully in the future from Japanese technology transfers. Export-oriented operations have often been exempted from regulations that are applicable to foreign investments and are usually evaluated mainly in terms of their contributions to a country's foreign exchange revenues.
