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 3: Industrial Development, Globalization and Multinational Enterprises: New Realities for Developing Countries

John H. Dunning and Rajneesh Narula

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

Extract

INTRODUCTION Fundamental changes in political ideologies and economic systems among a large number of developing countries have led to dramatic shifts in the way governments of these countries perceive their interests and those of their constituents. As a result, there are now a wide variety of attitudes and policies of national governments towards the activities of multinational enterprises (MNEs). This heterogeneity of responses is not, in itself, surprising, given the different stages of development, political ideologies, cultural norms, history and institutional infrastructure of countries. It is, nonetheless, possible to generalize that the relations between national governments and MNEs in the 1990s, if still uneasy, are more favourable than they have been for many years (Dunning, 1998). The present thrust towards MNE-friendly attitudes by governments dates back to the early 1980s, and corresponds to a variety of changes in the world economy which have been generically (although not always appropriately) described as ‘globalization’. Economic globalization refers to the increasing cross-border interdependence and integration of production and markets for goods, services and capital. This process leads to a widening of the extent and form of international transactions, and to a deepening of the interdependence between the actions of economic actors located in one country and those located in others (Dunning 1997a). It is perhaps best demonstrated by the huge increases in the transnational flows of both portfolio and direct investment, and in the number of cross-border strategic alliances.1 One of the primary consequences of globalization has been the growing convergence of income...

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