Global Capitalism, FDI and Competitiveness

Global Capitalism, FDI and Competitiveness

The Selected Essays of John H. Dunning, Volume II

John H. Dunning

Global Capitalism, FDI and Competitiveness comprises 15 of John Dunning’s most widely acknowledged writings on the changing characteristics of the global economy over the past three decades. In particular, it examines how these events have shaped, and been shaped by, the growing internationalization of all forms of business activity.

Chapter 8: Evaluating the Costs and Benefits of Multinational Enterprises to Host Countries: A ‘Tool-Kit’ Approach

John H. Dunning

Subjects: business and management, international business

Extract

Dunning2 02 chap 5 19/7/02 11:22 am Page 196 8. Evaluating the costs and benefits of multinational enterprises to host countries: a ‘tool-kit’ approach* INTRODUCTION Studies undertaken on the consequences and policy implications of the activities of foreign owned MNEs in host countries usually fall into two groups. These are, first, those which attempt, by way of field studies or use of published material, to evaluate the effects of inward direct investment and/or suggest policies which should be pursued in the light of such effects. Known as ‘because ... then’ type studies, to be successful they require: 1. a clearly defined set of criteria by which the contribution of foreign direct investment (FDI) is to be appraised; 2. precisely identified assumptions about what would have happened to the resources deployed in the absence of FDI; 3. comprehensive data on the operations of foreign affiliates of MNEs and also those of their parent companies, which might affect the contribution of their affiliates to the local economy. Studies of the ‘because ... then’ kind may be macro- or micro-oriented; they may attempt to examine a broad range of issues or limit themselves to particular effects of FDI, for example, on the transfer of technology, exports, employment, etc. Illustrative of this approach are the writings of Reddaway et al. (1968), Steuer et al. (1973) and Streeten and Lall (1973). The second group of studies concerns itself less with appraising the effects of FDI on MNEs as with providing a framework or tool-kit to assist...

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