Governments can make efforts to strengthen the absorptive capacity of domestic firms, including those investing overseas. They can, for example, offer support to activities that strengthen domestic capabilities and the competitiveness of home country firms. Funding or tax benefits can be offered to support innovation, knowledge creation and transfer, education and training, inter-firm linkages and other activities that boost absorptive capacity. This corresponds with enhancing home-country prerequisites aimed at maximising the benefits from OFDI (see 9) Maximizing benefits).
Key insights
- Governments can make efforts to strengthen the absorptive capacity of firms, including those investing overseas, by supporting activities that enhance domestic capabilities and the competitiveness of home country enterprises.
Interactions
B7) Absorptive capacity: Home-country measures can aim to enhance the absorptive capacity of the home country and its firms.
C1) Institutional arrangements: Some institutions have as part of their mission the enhancement of home-country absorptive capacity to promote the realisation of home-country effects.
C9) Maximizing benefits: Efforts to enhance home-country prerequisites can boost the absorptive capacity and international competitiveness of the home country and its firms.
Existing Country Practices
Strengthening absorptive capacity in Japan: The INCJ creates and nurtures key industries via open innovation and by overcoming boundaries between companies and industries.
Strengthening absorptive capacity in the Republic of Korea: KOSME assists business startups and provides specialised and comprehensive support to small but competitive SMEs to enhance their competitiveness and facilitate their entry into global markets.
Strengthening absorptive capacity in Malaysia: The SME Bank provides financing assistance and development expertise to SMEs to help them prosper and grow.
Strengthening absorptive capacity in Spain: The CDTI fosters technological development and innovation of Spanish companies to improve their technological capabilities, including by promoting international technology transfer, supporting the internationalisation of R&D and advancing international technology cooperation.