O u r understanding o f the nature, sources and extent o f innovation in East and South-east Asia is very poor . In spite o f the astonishing rates o f growth o f countries such as Malaysia, South K o r e a , Taiwan and Thai land over the past two to three decades , there remains a large gap in our knowledge o f the part innovation has played in the process o f growth and technological catch-up. 1

Until the recent crisis, Malaysia was one o f the fastest growing e conomies in the wor ld for over two decades . 2 Unlike Taiwan and South K o r e a , Malaysia (like other South-east Asian economies ) has d e p e n d e d for m u c h o f its industrial export growth o n large transnational corporat ions (TNCs ) . Has growth been a c c o m p a n i e d by innovation and technological change within the T N C s ? I f so, what kind o f innovation has occurred? H o w important has innovation been to Malaysia 's success? W h a t w o u l d motivate foreign T N C s to transfer skills and techno logy or prevent them from do ing so? Have the subsidiaries encouraged headquarters to transfer technology and, if so, h o w ?