Directions for the Sustainable Development and Competitiveness of Regions
New Horizons in Regional Science series
Edited by Charlie Karlsson, Börje Johansson and Roger R. Stough
Chapter 3: The influence of clustering on MNE location and innovation in Great Britain
Research on the foreign direct investment (FDI) activities of multinational enterprises (MNEs) has a long and rich tradition (Dunning, 2001). Research on the advantages, disadvantages and processes that arise in business clusters has a similar tradition (Marshall, 1890; Porter, 1998). Whilst it is clear that there is a considerable amount of MNE FDI in clusters (Kozul-Wright and Rowthorn, 1998), that FDI is relatively highly concentrated geographically (Shatz and Venables, 2000) and that this activity is increasing (Nachum, 2003), the body of research on this interface is small (Birkinshaw and Sölvell, 2000). However, it is growing fast in the face of increased globalization, deregulation and advances in information and communication technology, all of which have begun to prompt a re-evaluation of the spatial organization of MNE activity (Buckley and Ghauri, 2004). This chapter adds to the growing number of studies that focus on agglomeration effects at the sub-national scale. The chapter further addresses the neglected question of whether agglomeration promotes outward direct investment (ODI) as well as attracting inward investment. This neglect is somewhat surprising given that a central proposition of Porter (1990), which spurred strong academic and policy interest in clusters, was that location in clusters should promote international competitiveness.
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