SME Internationalization through Global Value Chains and Free Trade Agreements: Malaysian Evidence

Menaka Arudchelvan and Ganeshan Wignaraja
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Menaka Arudchelvan: Asian Development Bank Institute

No 515, ADBI Working Papers from Asian Development Bank Institute

Abstract: Growing internationalization of firms in Asia through participation in global value chains (GVCs) and free trade agreements (FTAs) has focused attention on small and medium-sized enterprises (SMEs). Yet there is scant literature on the characteristics of SMEs involved in GVCs and FTAs. Malaysia is reputed for its engagement in GVCs and is actively pursuing FTAs. Drawing on a survey of Malaysian enterprises, this paper examines the characteristics of SMEs in GVCs and FTAs and explores the policy implications. It finds that even among SMEs, firm size matters for participation in GVCs and FTAs. But size is not the whole story for SME internationalization. Licensing of foreign technology and investment in research and development are also positively associated with SMEs joining GVCs. Furthermore, increased exposure to international trade, knowledge of FTA provisions and central location positively affects the use of FTAs by SMEs. More business support for SMEs can help them to engage in GVCs and FTAs.

Keywords: internationalization; global value chains. utilization of free trade agreement; firm-level analysis (search for similar items in EconPapers)
JEL-codes: F13 F14 F15 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2015-02-18
New Economics Papers: this item is included in nep-int, nep-sbm and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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