Back to the Future
Chapter 5: The Changing Locational Determinants of MNE Activity: 1960–2006
INTRODUCTION 1. The last two decades have witnessed a number of dramatic changes in the location of international business (IB) activity and of our understanding of its determinants. Globalization, technological advances, the emergence of several new players on the world economic stage, and a new focus on the role of institutions and belief systems in the resource allocative process have been the main triggers for change. Globalization, through removing many of the natural and artificial barriers to cross border information flows and transactions, has widened the options of firms in their locational choices. Technological advances have, by lowering both transport and communication costs, helped to overcome many of the obstacles to transversing space. The astonishing growth of the Chinese economy, from being the tenth largest in the world in 1980 to the third largest in 2008; and the opening up of India and Central and Eastern European countries to the demands of the global market place, are reconfiguring the spatial landscape of economic activity. Research on the determinants of foreign direct investment (FDI) has increasingly pointed to the significance of institutional and governance related variables. Moreover, in spite of several current challenges to globalization – and it is by no means irreversible – the trend towards more interdependency and integration of physical and human resources seems set to continue over the next two decades or more. Spatial issues are, of course, the life and blood of international business scholarship. The changes just described offer huge intellectual challenges both to scholars interested in...
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