Global Players – Global Markets
International Institutions and Global Governance series
Edited by John-ren Chen
Chapter 6: Multinational Enterprises
, core labour standards and the role of international institutions Matthias Busse INTRODUCTION The enormous growth of foreign direct investment (FDI), or the rise of multinational enterprises’ (MNEs) activities across countries, is one of the most important signs of the increasing globalisation of the world economy over the past decade. For instance, whereas world production has grown by an annual average of 1.5 per cent in the period 1990 to 2001, trade has risen by 6 per cent and foreign direct investment by 23 per cent (UNCTAD, 2002). While most international investments take place within the Triad, Japan, the European Union and the United States, which make up three-quarters of global FDI inﬂows and some 85 per cent of outﬂows in that period, FDI ﬂows to developing countries are relatively small. In the same period, the 49 leastdeveloped countries1 attracted less than 1 per cent of FDI inﬂows. Yet the ratio of FDI inﬂows to GDP in these countries amounted to 2.2 per cent in this period, while the world average was 1.9 per cent, signifying a higher relevance of FDI to least-developed countries. While the pertinent literature is quite clear on the economic beneﬁts of FDI inﬂows to the host country, since FDI, among other factors, is likely to increase the capital stock of the host country and to introduce new technologies and management systems,2 there are concerns that the global competition to attract FDI could lead to undesirable outcomes. In particular, fears...
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