Current FDI trends in the ICT sector confirm the viability of the FDI-induced model, particularly if coupled with an upgrading and diversification policy.

Leading technology firms are increasingly locating knowledge-intensive manufacturing or R&D activities close to major growth markets while taking advantage of the locally available skills base. A recent survey by IBM-Plant Location International ranked cities based on success in attracting ICT investment projects. Besides London and Tokyo, all other cities in the top 10 were in emerging markets, mostly in China and India. Many of these investments could be qualified as knowledge-intensive ICT.

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Although investments continue in knowledge-based activities in developed countries, it is apparent that the knowledge economy is no longer exclusive to developed economies. The only major preconditions seem to be skills availability, telecoms infrastructure and protection of intellectual property rights.

Emerging markets’ game of catch-up in technology and skills raises legitimate concerns about the sustainability of the current strong emphasis put on knowledge-based clusters as the main way forward in developed economies. This concern adds to the existing scepticism about job creation in the knowledge-based economy. Research shows that most strategic manufacturing and R&D is still located in multinationals’ home countries, but how much of these and what activities will stay at home in the long run remains an intriguing question.

Wim Douw is a senior consultant at IBM-PLI.

e-mail: wim.douw@be.ibm.com