Multinationals and Industrial Competitiveness

Multinationals and Industrial Competitiveness

A New Agenda

New Horizons in International Business series

John H. Dunning and Rajneesh Narula

This book offers an important contribution to the contemporary debate on the role of multinational enterprises (MNEs) in economic development in an increasingly globalizing, knowledge-intensive and alliance-based world economy.

Chapter 1: The Multinational Enterprise, Industrial Development and Policy: An Introduction to the Primary Themes of this Volume

John H. Dunning and Rajneesh Narula

Subjects: business and management, international business, economics and finance, international business

Extract

The essays in this book, part or all of which were originally published between 1998 and 2004, set out the views and opinions of the authors on three main topics. Each of these is a key ingredient in the current debate on the contribution of multinational enterprises (MNE) to economic development in an increasingly globalizing, knowledge-intensive and alliance-based world economy. The first topic embraces some of the implications of the increasing role played by cross-border trade and foreign direct investment (FDI) for the competitiveness and structural transformation of developing countries. Chapter 2 first offers a brief review of the changing world economic scenario over the past two decades, and how this has affected the locational advantages of developing countries, as perceived by foreign investors, and the ownership advantages of foreign MNEs, as perceived by host countries. In doing so, it emphasizes the need for host governments continually to upgrade the institutional infrastructure underpinning their indigenous resources and capabilities, and their economic policies, if they wish to retain and/or raise their bargaining strengths, and to avoid ‘falling behind’ in the race to attract foreign investment. We make five main points. First, economic globalization has affected regions and countries unevenly and this is reflected in the configuration of MNE activity. Second, the failure of most of the developing world to catch up is associated with the inadequate level of domestic created assets and the inefficiency of local firms. Third, an important means by which to upgrade their competitiveness has...