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 9: Re-evaluating the Benefits of Foreign Direct Investment

John H. Dunning

Subjects: business and management, international business

Extract

* INTRODUCTION Thirty-eight years ago, the first comprehensive analysis on the consequences of inbound foreign direct investment (FDI) for a host country was published (Dunning, 1958). The subject of study was the UK; since that date, similar investigations have been undertaken – with varying degrees of sophistication – for almost every country in the world.1 Hundreds of books, theses and government reports, and thousands of papers in academic and professional journals have been written on the topic,2 and scarcely a day goes by without some newspaper or magazine article lauding or denigrating the globalization of business activity. Why, then, do we need to revisit the subject? Hasn’t everything worth while already been said or written about the role of MNEs in economic development? Well, quite apart from its spectacular growth over the past decade,3 we would offer two sets of reasons for the current resurgence of interest. Each reflects the changes in attitudes towards the costs and benefits of FDI which have occurred over the past 20 years: the first is by countries and the second by firms – and particularly by MNEs.4 THE CHANGING ATTITUDES OF COUNTRIES In the mid-1990s, most governments are acclaiming FDI as ‘good news’, after a period of being highly critical – if not downright hostile – to it in the 1970s and early 1980s. There are a number of possible explanations for this change of heart. Some of these are set out in Exhibit 9.1. The first is the renewed faith of most countries in the workings of...

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