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Global Capitalism, FDI and Competitiveness

The Selected Essays of John H. Dunning, Volume II

John H. Dunning

Global Capitalism, FDI and Competitiveness comprises 15 of John Dunning’s most widely acknowledged writings on the changing characteristics of the global economy over the past three decades. In particular, it examines how these events have shaped, and been shaped by, the growing internationalization of all forms of business activity.
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Chapter 7: Globalization, Technological Change and the Spatial Organization of Economic Activity

The Selected Essays of John H. Dunning, Volume II

John H. Dunning


* INTRODUCTION One of the most distinctive features of the globalizing economy of the early 1990s is the extent to which the cross-border movement of created assets is internalized either within multinational hierarchies or between two or more separately owned, but interrelated, firms1 located in different countries. It is the contention of this chapter that the resulting international division of labour, and the nature of the competitive advantages of both firms and countries, is fundamentally different from that determined by the disposition of locationally immobile assets and the transactions between independent buyers and sellers. For much of the past century, most of the explanations for the international specialization of value-added activity have been based upon the uneven spatial distribution of natural resources. But, today, the competitive and comparative advantages of countries are increasingly determined by the ability of governments and firms to create and organize the deployment of created assets, and from the trade in foreign direct investment (FDI) arising from these assets. At the same time, the significance of intrafirm and interfirm alliance trade is also increasing. The metamorphosis in the organization of natural and created assets, and of international transactions, is having critical implications for both the ownership and location of economic activity. This is most conspicuously shown by the increasing role of multinational enterprises (MNEs) in global production and trade (UNCTAD, 1995). It is true that new organizational systems are favouring the participation of small firms, but there are strong suggestions that those involved in the most dynamic...

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