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Multinational Corporations and Foreign Direct Investment: Avoiding Simplicity, Embracing Complexity

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  • Cohen, Stephen D.

    (The American University, Washington, D.C.)

Abstract

The integrating thesis of this study is the inevitability of heterogeneity in FDI and MNCs and, accordingly, the imperative of disaggregation. Nuance is too pervasive to permit many valid generalizations. This leads to a hardly earth-shattering, but surprisingly infrequently-offered conclusion that FDI, i.e. that any individual foreign-owned subsidiaries can, on balance, have a positive, negative, neutral (and/or irrelevant), or indeterminate effect. Foreign-owned subsidiaries are seldom if ever identical and need to be considered on a case by case basis according to circumstances. Hence, the phrase "it depends" is the mantra of this study. Disaggregation is an essential diagnostic tool to identify and measure the different levels of quality of MNCs subsidiaries. Most policy advocates and researchers, whatever their ideological persuasion, have failed to acknowledge the seemingly obvious: different kinds of businesses engage in different kinds of corporate activity and diverse results. The result of different input is different output. A nearly limitless number of characteristics are associated with three main variables: the nature and the effects of tens of thousands of individual foreign subsidiaries plus conditions in countries where they are located. MNCs are better described as the middlemen of change since they themselves are largely the effect of even larger phenomena, namely technological changes that restructure the international economic order. An opening exists for an even-handed, "no attitude" analysis that incorporates a methodology and viewpoint different from the thousands of books, articles, book chapters, and speeches written about MNCs and FDI. A large majority have failed to explicitly recognize how important perceptions, value judgments, ideology, and, sometimes, self-interest are in shaping discussions by both advocates and critics. People tend to view the FDI/MNC phenomena through differently configured lenses that have been individually molded by the unique mix of values and experiences that shapes our thinking. Evaluations of FDI and MNCs are prime examples of relatively oversimplified perceptions defining "truth". This book argues that a different route to understanding is needed and overdue: acknowledge the diversity and heterogeneity of phenomena that are lumped under very broad rubrics. MNCs are different by nature and therefore different in their respective mix of costs and benefits. Available in OSO: http://www.oxfordscholarship.com/oso/public/content/economicsfinance/0195179358/toc.html

Suggested Citation

  • Cohen, Stephen D., 2007. "Multinational Corporations and Foreign Direct Investment: Avoiding Simplicity, Embracing Complexity," OUP Catalogue, Oxford University Press, number 9780195179361.
  • Handle: RePEc:oxp:obooks:9780195179361
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    Citations

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    Cited by:

    1. Vergara, Sebastián, 2013. "The performance of transnational corporations: Evidence for the manufacturing industry in Chile," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    2. Pavla Vozárová, 2015. "The Role of FDI in Fostering Exports from the Host Country," International Journal of Economic Sciences, International Institute of Social and Economic Sciences, vol. 4(3), pages 94-114, September.
    3. Jan Hanousek & Evzen Kocenda & Pavla Vozarova, 2017. "Horizontal Crowding-Out Versus Vertical Synergies Under The Mne Presence," Proceedings of Economics and Finance Conferences 4507366, International Institute of Social and Economic Sciences.
    4. K, S Chalapati Rao & Dhar, Biswajit, 2011. "India's FDI Inflows: Trends and Concepts," MPRA Paper 29153, University Library of Munich, Germany.
    5. KS, Chalapati Rao & Dhar, Biswajit, 2018. "India's Recent Inward Foreign Direct Investment: An Assessment," MPRA Paper 88992, University Library of Munich, Germany.
    6. Fritsch Stefan, 2015. "Technological innovation, globalization, and varieties of capitalism: the case of Siemens AG as example for contingent institutional adaptation," Business and Politics, De Gruyter, vol. 17(1), pages 125-159, April.
    7. Nunnenkamp, Peter & Bremont, José Eduardo Alatorre, 2007. "FDI in Mexico: An empirical assessment of employment effects," Kiel Working Papers 1328, Kiel Institute for the World Economy (IfW).
    8. Glen Whelan & Jeremy Moon & Marc Orlitzky, 2009. "Human Rights, Transnational Corporations and Embedded Liberalism: What Chance Consensus?," Journal of Business Ethics, Springer, vol. 87(2), pages 367-383, August.
    9. Alina Taran & Marilena Mironiuc & Maria-Carmen Huian, 2016. "Examining The Influence Of Some Macroeconomic Factors On Foreign Direct Investments," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 18, pages 159-182, December.

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