Table of Contents

New Challenges for International Business Research

New Challenges for International Business Research

Back to the Future

John H. Dunning

In this final collection of his essays, John Dunning looks back on more than 40 years of research in international business (IB), whilst at the same time considering possibilities for the future. This book includes fifteen updated chapters, many of which have not been widely accessible to the IB community until now. It provides a fascinating insight into the evolution of Professor Dunning’s thinking on some of the most important issues in the contemporary global economy, from the role of institutions in development to the moral challenges of global capitalism. Including some personal reflections, this compelling collection provides a unique perspective on the intellectual contribution from one of the field’s greatest scholars.

Chapter 10: Foreign Direct Investment and the Locational Competitiveness of Countries

John H. Dunning

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


1. INTRODUCTION One of the several research interests I shared with Sanjaya Lall was on the determinants of the competitiveness of countries. In 2001, Sanjaya wrote a trenchant criticism of the quality and relevance of some of the indices used to identify and assess the competitiveness of developing countries by the Global Competitiveness Report (GCR).1 While I endorse many of his concerns, I believe that, in one respect at least, the GCR does help us to better appreciate the role played by two distinctive, yet interrelated, components of competitiveness, which are often treated as one in the literature. These are first, the resources, capabilities and markets (RCMs) which make up the physical 2 environment in which firms and other organisations create economic well-being; and second, the institutions (together with the values and belief systems underpinning them) (I) which provide the incentive structures to make up the human environment, and (II) which set the rules of the game for, and determine the cognition and motivation of, firms and other wealth-creating entities. All too frequently in the past, in assessing national competitiveness, the RCM and I determinants of economic activity have been treated separately. Partly this reflects the different disciplinary and methodological approaches to evaluating each. While mainstream economists, borrowing from the causal and functional analytical tools of the physical and/ or biological sciences, have favoured the ‘if–then’ approach to measuring competitiveness, other social scientists, notably sociologists, have focused more on the intentionality of human decision takers, and on the...

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