TECHNOLOGY TRANSFER AND ABSORPTIVE CAPACITY IN THE ELECTRIC VEHICLE INDUSTRY IN BRAZIL: A CASE STUDY OF BYD

Abstract

This research seeks to understand how the Brazilian automotive production chain is restructuring in light of the emerging trend toward electrified vehicles. It uses the entry and operations of BYD within this context as a basis for analysis, specifically examining the possibilities for technology transfer and absorption. The study is a qualitative, exploratory literature review, drawing on scientific articles, books, and academic papers sourced from Google Scholar, the CAPES Journal Portal, and SciELO, using keywords related to BYD, the Eclectic Paradigm (OLI), and the automotive industry. The analysis explores the relationship between foreign direct investment, the internationalization of production, absorptive capacity, and technological development, referencing authors such as Dunning, Cohen and Levinthal, Lall, Pavitt, Rosenberg, and Blomström and Kokko. The findings indicate that while the entry of a foreign firm may create opportunities to expand production capacity and develop local technologies, it does not, in itself, guarantee technology transfer or the incorporation of knowledge by the domestic industry. In this context, the host country’s absorptive capacity, public policy, and the relationships forged between foreign firms and domestic stakeholders are the primary pillars for the effective development of technological capabilities. Consequently, this research highlights the necessity of distinguishing between an expansion in production and the actual incorporation of technological knowledge, while taking into account the specific conditions in Brazil and the potential for developing national capabilities.