import-substitution one $ ^{41} $ .

2) What is the role played by the industry in the process of economic development for the country considered?

Electronics is a main source of linkages and dynamic externalities which concur to the upgrading of the industrial structure. In section 2, we stressed the potential of the backward and forward linkages creation effect. We should now consider some other dynamic externalities as the development of electronics will bring about the diffusion and accumulation of engineering skills and mechanical knowledge, stimulate inventions and innovations, and finally create new demand. However, these effects will depend on the recipient countries' capacity to absorb the technology that is transferred through foreign investments $ ^{42} $ . Direct growth effect on employment, output and export should be observed in combination with the various spillovers implied by the linkages on the whole economy.

3) To what extent will the form assumed by the process of technology absorption affect the late comers' development?

Since the developing countries need to borrow the technology from abroad, the way it is transferred has a large influence on their future possibility of reaching technological independence. Japanese experience was such that at the initial phase of the development process, foreign technology was borrowed by means of imports. Lately, thanks to the availability of local capital and human resources, a process of imitation, modification and improvement of the imported goods was started and technological autonomy was eventually reached. Nowadays, since the speed of innovation has become much faster, it is much more difficult for the developing countries to embark upon such a time requiring process of trials and errors, as Japan did. Furthermore, they need human resources as well as entrepreneurs able to absorb and transform into market potentials the technologies which are usually transferred through FDI. The problem, here, can be seen from two different points of view. First, the will of the advanced countries to effectively transfer the technology. Second, the real capacity of the developing countries to absorb it $ ^{43} $ . The form assumed by the process of technological absorption, which strictly depends on skilled labor's availability, is crucial for reaching not only an autonomous development, but also a more general upgrading of the whole industrial structure.

### 5.2 Comparison between PC and CPC

In the previous paragraph we discussed the likelihood of the PC and CPC theories as good explanations of the relocation process occurring in electronics industry from Japan to Malaysia. Our conclusion was that, since the “actor” is a developing country and the industry is a highly innovative one, the case is not properly covered by any of the two approaches. Nonetheless, as our purpose is of better understanding the process occurring at the sub-industry level, we will anyhow propose a simple comparison between the two theories, but first let us briefly reconsider the peculiarities and the limits of PC and CPC.

The PC hypothesis presents the evolutionary trend of trade and investment's flows towards developing countries, from the stand-point of foreign MNEs (following a cost-reduction strategy). In particular, it is referred to the case of innovative products exported to more advanced countries and, in terms of industrial policy, entails the process of produc-