Multinationals and Economic Geography
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Multinationals and Economic Geography

Location, Technology and Innovation

Simona Iammarino and Philip McCann

After more than fifty years of systematic research on multinational enterprises (MNEs) what is apparent is that there is, as yet, no unified or dominant theory of the MNE. The objective of this book is to bring into focus one particular dimension of MNE behaviour and activity that has been relatively under-researched – namely the geography of the multinational enterprise – as understood through the lens of innovation and technological change. The authors clearly demonstrate that geography is becoming increasingly important for MNEs and, in turn, MNEs are becoming progressively more important for economic geography. The pivot on which this vital relationship turns is the creation, diffusion and management of new knowledge.
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Chapter 8: Multinationals, emerging economies and the changing economic geography

Location, Technology and Innovation

Simona Iammarino and Philip McCann


As we have already seen in Chapter 6, in the current phase of globalization the importance of the role played by trade blocs and areas of integration in the world economy has increased. At the same time, the importance of multinationals has increased (Rugman 2000, 2005). For example, if we take the case of the three super-regions of US, EU and East Asia, we find that the average same-region sales share of the world’s top 500 MNEs is over 70 per cent (Rugman 2005). Moreover, as discussed in Chapters 4 and 5, MNEs play a crucial role in facilitating knowledge flows across space, and this is particularly evident within super-regions. However, along with FDI flows, the overwhelming dominance of developed economies in global R & D effort is still very marked. Of the 2600 foreign affiliates in the global economy whose primary role is R & D, almost 70 per cent are still located within the triad of US, EU and Japan (UNCTAD 2005). In terms of global shares, the geographical origins of global R & D reflect almost exactly the geographical origins of FDI outflows and, if anything, they are slightly even more skewed in favour of most developed macro-regional blocks.

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