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Multinational enterprises, development and globalisation: Some clarifications and a research agenda

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  • Narula, Rajneesh

    ()
    (Henley Business School, University of Reading, CIBS, University of Reading, UNU-MERIT)

  • Dunning, John H.

    (University of Reading)

Abstract

This paper revisits an earlier contribution (Narula and Dunning 2000) and considers how economic globalisation has changed the nature of the MNE, MNE motivations, the MNE subsidiary and the modalities by which they interact with domestic economic actors. Most developing countries, however, have responded reactively. We discuss how the opportunities and challenges for developing countries in following an MNE-assisted development strategy have changed over the last decade. The growing share of industrial activity owned and controlled by MNEs does not always result in a proportional increase in development effects, because individual MNE establishments have different potential for externalities. Concatenation is important: when stage-inappropriate MNE activities are established, crowding-out or regulatory capture is a likely outcome. We highlight the need for systematically linking MNE and industrial policies, but differently than in the import-substitution era. Attracting the 'rights kind' of MNE activity remains important, but the greater heterogeneity requires more customisation of policy tools. Lastly, we warn of the dangers of underestimating the social and political costs of structural adjustment and rapid institutional change associated with globalization.

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Bibliographic Info

Paper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 023.

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Date of creation: 2009
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Handle: RePEc:unm:unumer:2009023

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Keywords: FDI; spillovers; industrial policy; governments; development; WTO; globalisation; developing countries; liberalisation;

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Citations

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Cited by:
  1. José Guimón* & Sergey Filippov, 2012. "Competing for High-quality FDI: Management Challenges for Investment Promotion Agencies," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 4(2), pages 25-44, July.
  2. Giroud, Axèle & Jindra, Björn & Marek, Philipp, 2012. "Heterogeneous FDI in Transition Economies – A Novel Approach to Assess the Developmental Impact of Backward Linkages," World Development, Elsevier, vol. 40(11), pages 2206-2220.
  3. Keshari, Pradeep Kumar, 2013. "Efficiency spillovers from FDI in the Indian machinery industry: a firm-level study using panel data models," MPRA Paper 47070, University Library of Munich, Germany.
  4. Narula, Rajneesh & Nguyen, Quyen T.K., 2011. "Emerging country MNEs and the role of home countries: separating fact from irrational expectations," MERIT Working Papers 021, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  5. Paulo Figueiredo & Klauber Brito, 2011. "The innovation performance of MNE subsidiaries and local embeddedness: evidence from an emerging economy," Journal of Evolutionary Economics, Springer, vol. 21(1), pages 141-165, February.
  6. Narula, Rajneesh & Prasad Kodiyat, Tiju, 2013. "The growth of outward FDI and the competitiveness of the underlying economy: the case of India," MERIT Working Papers 042, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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