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Improving the developmental impact of multinational enterprises: policy and research challenges

Rajneesh Narula () and André Pineli
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André Pineli: University of Reading

Economia e Politica Industriale: Journal of Industrial and Business Economics, 2019, vol. 46, issue 1, 1-24

Abstract: Abstract We summarize the key empirical evidence on the nexus between MNEs and development, focusing on issues that are relevant for the formulation, implementation and assessment of policies by host developing countries. We also delve into what we do not know, as well as topics for which the evidence is still quite blurred. We discuss the reasons for the absence of clear evidence, and potential avenues for future research to improve policies. Although most countries rely on MNEs/FDI as a central plank of their development strategy, the collective weight of academic research has not led to a fine-tuning of policy implementation. Countries still rely on policies for which evidence is sparse, or no longer valid in an era of globalisation. Much of the literature has focused on externalities and spillovers, and has deemphasised the other ‘effects’ of MNE activity, implicitly assuming that MNEs are almost always beneficial for development. Few rents are costless when the opportunity costs of scarce resources are considered, especially in the longer term. Despite the abundance of empirical studies (of increasing sophistication), most ignore the significance of structural change. Growth and the interaction with MNE activity is not linear or monotonic over time, because the economy itself is in a constant state of flux.

Keywords: Multinational enterprises; Economic development; Developing countries; GDP growth; Spillovers; Public policy (search for similar items in EconPapers)
JEL-codes: D62 F23 O14 O19 O24 D62 (search for similar items in EconPapers)
Date: 2019
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Working Paper: Improving the Developmental Impact of Multinational Enterprises:Policy and Research challenges (2018) Downloads
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Economia e Politica Industriale: Journal of Industrial and Business Economics is currently edited by C. Cambini, M.G. Colombo, L. Piscitello, L. Rondi and A. Zanfei

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