FDI spillovers in emerging markets
DRC Working Papers
Foreign Direct Investment in Emerging Markets
CENTRE FOR NEW AND EMERGING MARKETS
LONDON BUSINESS SCHOOL
No. 15
FDI Spillovers in Emerging Markets:
A Literature Review and New Perspectives
By
Klaus E. Meyer
Copenhagen Business School
Draft, March 2003
Do not quote
CNEM is a Development Research Centre supported by the UK Department for International Development
1
Contents
1.
2.
3.
4.
5.
6.
7.
8.
Introduction: Spillovers in a Changing Global Economy
Macroeconomic perspectives
Knowledge spillovers
Inter-industry linkage effects
Competition and crowding out
Societal effects
Investor and project specific determinants of spillovers
Research Agenda
Acknowledgements: I thank Arie Lewin for stimulating this research, and Evis Sinani for her research assistance. Moreover, the following colleagues have been providing helpful comments: Saul Estrin,
Camilla Jensen, Mike Peng and participants of the JIBS conference ‘new frontiers in international business research’ at Duke University.
2
Abstract
Multinational enterprises (MNEs) play a pivotal role in the development of many emerging markets, and have consequently received due attention by scholarly research in economics and by policy analysts. In contrast, international business scholars have been comparatively uninterested in analyzing this role of MNEs. Yet, they would have important contributions to make to these debates, in particular in two ways: Firstly, the management perspective is essential to understand the interaction between MNEs and their local environment. Secondly, the application of theories and research methodologies developed in management research provide new insights on the dynamics of MNEs in emerging markets.
The prime objective of this paper is thus to motivate international business scholars (beyond those working within a traditional economics paradigm) to engage in research on the role of FDI in emerging economy
Foreign Direct Investment in Emerging Markets
CENTRE FOR NEW AND EMERGING MARKETS
LONDON BUSINESS SCHOOL
No. 15
FDI Spillovers in Emerging Markets:
A Literature Review and New Perspectives
By
Klaus E. Meyer
Copenhagen Business School
Draft, March 2003
Do not quote
CNEM is a Development Research Centre supported by the UK Department for International Development
1
Contents
1.
2.
3.
4.
5.
6.
7.
8.
Introduction: Spillovers in a Changing Global Economy
Macroeconomic perspectives
Knowledge spillovers
Inter-industry linkage effects
Competition and crowding out
Societal effects
Investor and project specific determinants of spillovers
Research Agenda
Acknowledgements: I thank Arie Lewin for stimulating this research, and Evis Sinani for her research assistance. Moreover, the following colleagues have been providing helpful comments: Saul Estrin,
Camilla Jensen, Mike Peng and participants of the JIBS conference ‘new frontiers in international business research’ at Duke University.
2
Abstract
Multinational enterprises (MNEs) play a pivotal role in the development of many emerging markets, and have consequently received due attention by scholarly research in economics and by policy analysts. In contrast, international business scholars have been comparatively uninterested in analyzing this role of MNEs. Yet, they would have important contributions to make to these debates, in particular in two ways: Firstly, the management perspective is essential to understand the interaction between MNEs and their local environment. Secondly, the application of theories and research methodologies developed in management research provide new insights on the dynamics of MNEs in emerging markets.
The prime objective of this paper is thus to motivate international business scholars (beyond those working within a traditional economics paradigm) to engage in research on the role of FDI in emerging economy
References: Aitken, B. and A. Harrison. 1991. Are there Spillovers from Foreign Direct Investment? Evidence from Panel Data for Venezuela, mimeo, MIT and World Bank, November Aitken, B. and A. Harrison. 1999. Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela Aitken, B., Harrison, A., and Robert E. Lipsey. 1996. Wages and Foreign Ownership. A Comparative Study of Mexico, Venezuela and The United States Altenburg, T. (2000): Linkages and Spillovers between Transnational Corporations and small and medium-sized enterprises in developing countries: Opportunities and policies, Anand and Delios (2001): … Anderson, R.W Audretsch, D.B. (1998): Agglomeration and the Location of Innovative Activity, Oxford Review of Economic Policy 14 (2). Barney, J. B. (1991). ‘Firm resources and sustained competitive advantage’. Journal of Management, 17, 1, 99-120. Barro, Robert J. and Xavier Sala-i-Martin (1995). Economic Growth, New York: McGrawHill, Inc. Belderbos, R., G. Capannelli and K. Fukao (2001): Backward vertical linkages of foreign manufacturing affiliates: Evidence from Japanese multinationals, World Development Birkinshaw, J. (2000). Entrepreneurship in the Global Firm. Thousand Oaks, Sage. Blalock. G. 2001. Technology from foreign firect investment: strategic transfer through supply chains, mimeo, Haas School of Business, University of California at Berkeley. Blomström, M. and F. Sjoholm. 1999. Technology Transfer and Spillovers: Does Local Participation with Multinationals Matter? European Economic Review, Vol Blomström, M., M. Zejan and A. Kokko, 2000. Foreign Direct Investment, Firm and Host Country Strategies Blomström, M., and A. Kokko, 2002. FDI and Human Capital: A Research Agenda, Technical Paper no Borensztein, E., De Gregorio, J. and J-W. Lee. 1998. How does foreign direct investment affect economic growth? Journal of International Economics, Vol Borrus, M., D. Ernst and S. Haggard, eds. (2000): International Production Networks in Asia: Rivalry or Riches? London: Routledge. Borrus, Michael and John Zysman (1998): Globalization with Borders: The Rise of Wintelism as the Future if Industrial Competition, in: A Branstetter, Lee, 2000. Is FDI a channel of knowledge spillovers? Evidence from Japans FDI in the U.S Buckley, P., Clegg, J., and C. Wang (2002): The Impact of Inward FDI on the performance of Chinese Manufacturing Firms Cantwell, J. 1989. Technological innovation and multinational corporations, Oxford Basil Blackwell. Casson, M.E. 1994. Enterprise Culture and Institutional Change in Eastern Europe, in: P.J. Caves, Richard E. (1971): International Corporations: The Industrial Economics of Foreign Investment, Economica 38, p Caves, R.E. 1974. Multinational Firms, Competition and Productivity in Host Country Markets Caves, Richard (1996): Multinational Enterprise and Economic Analysis, 2nd ed., Cambridge: CUP. Chandler, A.D., P. Hagström and Ö. Sölvell, eds (1998): The dynamic firm: The Role of Technology, Strategy, Organizations and Regions, Oxford: Oxford University Press. Chen, E.K.Y. (1983): Multinational Corporations, Technology and Employment, London: Macmillan. Child, J. (1993). 'Society and enterprise between hierarchy and market. ' In Child, J. (Ed.), ‘Societal Change between Market and Organization’, Aldershot: Avebury. Child, J. and A. P. Czegledy (1996): ‘Managerial learning in the transformation of Eastern Europe: Some key issues. ' Organization Studies, 17, 167-80. Christmann, P. and G. Taylor (2001): Globalization and the environment, Journal of International Business Studies 32 (3), p Economic Journal (1989), 569-596. Cohen, W. M. and Levinthal, D. A. (1990). ‘Absorptive capacity: A new perspective on learning and innovation’ Criscuolo, P. and R. Narula (2002): A novel approach to national technological accumulation and absorptive capacity: aggregating Cohen and Levinthal, MERIT Research memorandum no. 2002-16. Dasgupta, S., B. Laplante, H. Wang and D. Wheeler (2002): Confronting the environmental Kuznets curve, Journal of Economic Perspectives 16 (1), p De la Torre, J. (1981): Foreign Investment and economic development: Conflict and negotiation, Journal of International Business Studies, Vol De Mello, L.R. (1999): Foreign direct investment-led growth: Evidence from time series and panel data, Oxford Economic Papers 51, p Dicken, Peter (1998): Global Shift. The Internationalization of Economic Activity, 3rd ed., London: Chapman.