Theories and Paradigms of International Business Activity

Theories and Paradigms of International Business Activity

The Selected Essays of John H. Dunning, Volume I

John H. Dunning

This volume contains a selection of John Dunning’s best known and highly acclaimed writings on the theory of international business activity. Spanning more than three decades, the 16 contributions trace the evolution of his thoughts and ideas as an economist, from his first article on the determinants of international production, published in 1973, to his most recent essay on relational assets, networks and global business activity, completed in 2002.

Chapter 8: Some Historical Antecedents to the Eclectic Paradigm

John H. Dunning

Subjects: business and management, international business

Extract

* INTRODUCTION This chapter represents an attempt to resolve an apparent paradox in the theory and history of international production. Until recently, most economists have believed that international production was of little importance in the world economy before the Second World War. If this were so, it would explain why it is only in the last two decades that we have seen the emergence of a separate theory of the multinational enterprise (MNE), the major institution through which international production is organized. However, as has been demonstrated elsewhere (Dunning, 1993), international production was both absolutely and relatively more important before 1914 than at any other time until at least the 1960s. ‘Why, then, was it not incorporated into theoretical analysis before 1914? As we mention below, there was some discussion in the literature, around the turn of the century, of international cartels, and of the export of capital in general. Yet this lay largely outside the mainstream of economic thought, in which international production was not treated as an issue worthy of separate attention. We shall argue that a closer inspection of the theory and history of international production helps us to answer this question. On the historical side, there has been a major shift in the geographical and industrial composition of international production, as well as in the organizational capacities of the MNE, which now make it impossible to treat as a ‘special case’ of certain more general economic phenomena. On the theoretical side, as illustrated by Table 8.1, the...

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