Foreign Direct Investment : Firm and Host Country Strategies

The behavior of multinational corporations and their affiliates, and the impact of foreign direct investment on host economics, vary between countries and industries in a systematic way. MNCs select their strategies depending on the characteristics of their technologies and products. Some host country governments try simultaneously to influence behavior of the foreign MNC's operating in their territory. The effects of (FDI) on the host economy are determined by this intricate interplay of firm and host country strategies. This book summarizes more than a decade of research aiming to understand this interplay. The behavior of multinational corporations and their affiliates, and the impact of foreign direct investment on host economies, vary between countries and industries in a systematic way. Multinational corporations select their strategies depending on the characteristics of their technologies and products, as well as the characteristics and policies of the host countries. Some host country governments try simultaneously to influence the behavior of the foreign MNCs operating in their territory, either directly through regulations or indirectly, by affecting the environment in which the MNCs operate. The effects of FDI on the host economy are determined by this intricate interplay of firm and host country strategies. This book summarizes more than a decade of research aiming to understand this interplay. The first part of the book is concerned with differences in firm strategies, both regarding entry decisions and the subsequent operations of foreign subsidiaries. Some of the questions examined in this part of the book are: Why do MNCs seek out joint ventures? When do MNCs enter a new market by acquiring an existing company? What determines the amount of R & D undertaken in a foreign subsidiary, and the amount of intra-firm trade between the parent and the subsidiary? The second part of the book focuses on the effects of FDI on host countries, with particular emphasis on the role of MNCs in international technology transfer. How does FDI affect productivity in local host country firms? What is the role of formal and informal technology transfers? How can host country governments maximize the technology imports of foreign MNCs? The analyses of MNC behavior and the effects of FDI presented in this book are of equal interest to students of international business, economics, and development, and to policy makers in countries hosting foreign MNCs Cover......Page 1 Contents......Page 6 List of Tables and Figures......Page 8 Acknowledgements......Page 11 Preface......Page 12 1 Introduction......Page 14 Part I: Firm Strategies......Page 26 2 Modes of International Investment......Page 28 3 Why Do Multinationals Seek Out Joint Ventures?......Page 43 4 MNC Entry Strategies: New Ventures or Acquisitions?......Page 55 5 R&D Activities in Affiliates of Swedish MNCs......Page 62 6 Intra-firm Trade and Swedish Multinationals......Page 76 7 MNCs and Structural Adjustment in Latin America: Lessons from the Debt Crisis......Page 94 Part II: Host Country Strategies......Page 112 8 Multinational Corporations and Spillovers......Page 114 9 Multinational Corporations and Productivity Convergence in Mexico......Page 147 10 Technology, Market Characteristics and Spillovers......Page 173 11 Local Technological Capability and Productivity Spillovers from FDI in the Uruguayan Manufacturing Sector......Page 190 12 Productivity Spillovers from Competition between Local Firms and Foreign Affiliates......Page 200 13 Policies to Encourage Inflows of Technology through Foreign Multinationals......Page 216 14 Host Country Competition, Labour Skills, and Technology Transfer by Multinationals......Page 234 Bibliography......Page 245 Index......Page 256 "The behaviour of multinational corporations and their affiliates, and the impact of foreign direct investment on host economies, vary between countries and industries in a systematic way. Multinational corporations (MNCs) select their strategies depending on the characteristics of their technologies and products, as well as the characteristics and policies of the host countries. Some host country governments try simultaneously to influence the behaviour of the foreign MNCs operating in their territory, either directly through regulations, or indirectly by affecting the environment in which the MNCs operate. The effects of foreign direct investment (FDI) on the host economy are determined by this intricate interplay of firm and host country strategies This book gathers together thirteen articles that deal with the internationalization strategies of firms, effects of foreign investment on host countries and host country policies vis-a-vis foreign multinationals. It illustrates how the behaviour of multinational firms and their effects on the host country are likely to differ between countries in a systematic manner, depending on the host country's economic policies and market conditions and provides a new approach on how to look at multinational firms. This book summarizes more than a decade of research aiming to understand this interplay." "The analyses of MNC behaviour and the effects of FDI presented in this book are of interest to students of international business, economics and development, as well as to policy-makers in countries hosting foreign MNCs."--Jacket The central theme of this book is that the behaviour of multinational corporations (MNCs) and their affiliates, and the impact of inward foreign direct investment (FDI) on the host economy, will vary between industries and countries.