The Importance of Domestic Capabilities for FDI-assisted Development: Lessons from Asia and Latin America

Rajneesh Narula

John H Dunning Centre for International Business Discussion Papers from Henley Business School, University of Reading

Abstract: This paper argues that the rapid growth of certain emerging economies over the last two decades is not only due to liberalised markets, MNEs and laissez-faire policies, but also to the effects of industrial development strategies that continue to share several similarities to the import-substitution industrialisation approach. The building up of capabilities in the domestic sector is crucial. At the same time, the heterogeneity in country experiences and their varying degrees of success at becoming internationally competitive indicates that understanding MNEassisted development requires us to go beyond just improving absorptive capacities. We also need to understand the role of political economy and issues of path-dependency in both policies and resources. I illustrate my arguments by contrasting the experiences of East Asian and Latin American economies.

Keywords: MNEs; development; import substitution; policy; FDI; Latin America; Asia (search for similar items in EconPapers)
Date: 2015-05
New Economics Papers: this item is included in nep-int and nep-sea
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Citations: View citations in EconPapers (1)

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