ABSTRACT
While spillover effects generated by the presence of large foreign firms have been well documented in the literature, little is known in the case of spillovers associated with small foreign-owned or returnee-migrant-owned enterprises in developing countries. Focusing on these two unaddressed aspects and based on a case-study approach, this chapter outlined interviews of SMEs in Tanzania and examined their technology spillover mechanisms from the perspective of industrial development. Major findings indicate that, for the most part, entrepreneurs have little or no knowledge of how to upgrade technical capabilities of their firms, and many of them end up with failed businesses that could have been profitable. Moreover, the lack of interactions with their counterparts owned by Tanzanian returnee migrants and Chinese-invested enterprises seems to have been hindering their opportunities for technology absorption and upgrading. For this reason, the presence of foreign-owned and returnee-owned firms might not be helping in the technology upgrading of SMEs. Therefore, policy priority should focus on overcoming some of the identified limitations of SMEs, such as through identification of their technology needs and strengthening of their exchange of information through networking. There is a need for a platform of knowledge-sharing for entrepreneurs so that they can better manage the accumulation of technical knowledge.
