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Multinationals on the periphery
DaimlerChrysler South Africa,human capital upgrading and regional economic development
Jo Lorentzen
Education, Science and Skills Development Research Programme, Occasional Paper 2
Series Editor: Andre Kraak, Executive Director: Education, Science and Skills Development Research Programme
of the Human Sciences Research Council
Published by HSRC Press
Private Bag X9182, Cape Town, 8000, South Africa
www.hsrcpress.ac.za
© 2006 Human Sciences Research Council
First published 2006
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ISBN 0 7969 2131 8
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Preface
The Human Sciences Research Council (HSRC) has established an occasional paper series. The occasional papers are designed to be quick, convenient vehicles for making timely contributions to debates or for disseminating interim research findings, or they may be finished, publication-ready works. Authors invite comments and suggestions from readers.
About the author
Jo Lorentzen is Chief Research Specialist in the Education, Science and Skills Development Research Programme. He studied in Washington (MA, American University) and Florence (PhD, European University Institute) and taught at universities in Eastern Europe, Italy, France, and the US. Before joining the HSRC, he was associate professor of international business at Copenhagen Business School and spent academic year 2003/04 on sabbatical at the School of Development Studies at UKZN where he is now an honorary research fellow.
Jo is mainly interested in microeconomic perspectives on technological learning and their implications for innovation and industrial policy in latecomer countries. He currently runs a study of the determinants of innovative activities in the Western Cape, focusing on the wine industry, boatbuilding, medical devices, and IT. He closely works with the WC provincial government on its Microeconomic Develop-ment Strategy (MEDS), and teaches modules on competition policy, intellectual property rights, and science and technology in developing countries at UCT.
Acknowledgements
The UK Department for International Development (DfID) supports policies, programmes and projects to promote international development. It provided funding for this research as part of that objective through a grant to the Overseas Development Institute (ODI), managed by Dirk Willem Te Velde. The views and opinions expressed are those of the author alone. Sean Ellis of the South African Automotive Benchmarking Club (SAABC) arranged all interviews and the follow-up dissemination workshop. Justin Barnes provided the benchmarking data. All interviewees gave generously of their time. Without their assistance and input, this study would not have been possible.
Abstract
This paper is a case study of a larger research project that analysed the relationship between human capital in host economies and international capital inflows. It describes how DaimlerChrysler upgraded human resources in the area around its East London plant in one of South Africa’s least developed provinces where the company manufactures the Mercedes C-Class model for export. It shows the extent and depth of the upgrading along and beyond the automotive supply chain, and its repercussions on local education and training institutions. Finally, it analyses how and why this virtuous interaction between Foreign Direct Investment (FDI) and local industrial development in the short and medium term may in the absence of proper regional economic planning turn into a much less desirable outcome in the longer term.
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