Multinationals and Industrial Competitiveness
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Multinationals and Industrial Competitiveness

A New Agenda

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.
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Chapter 5: Multinational Firms, Regional Integration and Globalizing Markets

John H. Dunning and Rajneesh Narula


5. Multinational firms, regional integration and globalizing markets INTRODUCTION Policy makers in the developing world are once again enthralled by the concept of regional integration (RI) and its potential benefits. This has led to a revival of previously unsuccessful or dormant schemes and the establishment of a clutch of new agreements. Part of this renewed enthusiasm has to do with the benefits that have accrued to members associated with various European RI schemes and NAFTA, and in particular, the experience of Mexico in NAFTA. It is not a coincidence that this renewed interest in RI has occurred while the concept of globalization pervades our understanding of the world economy. The two are not unrelated, and some have argued that RI projects appear to represent an opportunity to redress the inequities of multilateral agreements (Baldwin, 1997) and to increase their autonomy from outside forces (Vernon, 1996). In other words, RI schemes are seen as a response to globalization. There are several similarities between globalization and RI. Both are processes closely associated with cross-border economic activity, although globalization is more a consequence of increased cross-border activity, while RI is intended to cause it. The proliferation of crossborder activity is regarded as a primary symptom of globalization. Both globalization and RI are believed to provide opportunities for more rapid economic growth, associated in large part with increased FDI and trade that are the consequence of increased opportunities to exploit economies of scale. Much of the work on RI focuses on trade...

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