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 2: Developing Countries versus Multinationals in a Globalizing World: The Dangers of Falling Behind

John H. Dunning and Rajneesh Narula

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


INTRODUCTION The nature and extent of the interaction between MNEs and governments of developing countries have undergone several dramatic shifts over the postwar era. Partly, this is a result of fundamental changes in political ideologies and in the economic systems associated with these ideologies. This has led to a wide variety of policies, attitudes and actions by governments towards MNE activity, which has spanned the continuum between the laissez-faire, neoliberal approach maintained by the pre-1997 Hong Kong government and the structural adjustment programmes sponsored by the World Bank, on the one hand, and the centrally-planned administrative systems of Eastern European countries and the People’s Republic of China on the other. This heterogeneity of policies is, in itself, unsurprising, given the different stages of development and economic structure of these countries. However, overarching these variables, and influencing them, has been the radical reorientation of development strategies by many developing countries over the past two decades from those of an import-substituting and inward-looking variety towards those geared towards outward-looking and export-oriented goals. These have led to an even wider variety of policy orientations as countries have undertaken structural adjustment programmes, while preserving certain elements of their former regimes. The present thrust towards MNE-friendly attitudes by governments dates back to the early 1980s, and can be ascribed to broad changes in the world economy which have been generically (although not always appropriately) described as ‘globalization’. Economic globalization, as used here, refers to the increasing cross-border interdependence and integration of production and markets...

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