Handbook on Small Nations in the Global Economy

Handbook on Small Nations in the Global Economy

The Contribution of Multinational Enterprises to National Economic Success

Elgar original reference

Edited by Daniel Van Den Bulcke, Alain Verbeke and Wenlong Yuan

This unique, extensive Handbook illustrates that multinational enterprises can contribute substantially to the competitive advantage of small countries. It advances the notion that small nations increasingly need to rely on both home-grown and foreign multinational enterprises to achieve domestic economic success in industries characterized by international competition.

Chapter 3: Belgium’s Competitiveness: A Comparison of Foreign and Domestic Enterprises

Filip De Beule and Ilke Van Beveren

Subjects: business and management, international business


Filip De Beule and Ilke Van Beveren This chapter analyses Belgium’s diamond of competitiveness, including the importance and role of multinational enterprises (MNEs). As MNEs follow, to some extent, the path of least resistance, and as policies, attitudes and environments of individual countries – also known as location specific advantages – differ, so do levels of multinational activity. Relevant factors that may attract and possibly deter foreign direct investment (FDI) specifically include the political and economic situation, the government’s policy towards foreign-owned enterprises, the size of the market, as well as the availability of good infrastructure, skilled labour, supporting industries, favourable tax system, efficient capital market, competitive environment or the lack thereof. These features are the different facets of Porter’s diamond, which not only foster domestic firms but also attract foreign firms and which can either sharpen the competitiveness of existing goods and services in the host-country supply system through responsive market-seeking behaviour, or widen the product range and technological scope through knowledge-seeking activity. These characteristics also embed domestic and foreign firms in a mutually dependent and sustainable fashion in the local evolutionary processes. The following section analyses Belgium’s status as a small open economy, using data on FDI and international trade. The next section looks more specifically at the importance of foreign and domestic multinational firms in a sector analysis, while the next one analyses in more detail the chemical, pharmaceutical and biotechnology sector. The chapter ends by drawing some, we hope interesting, conclusions from the analysis. Small open economy Belgium...

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