Title: FDI and multinationals: patterns, impacts and policies
Abstract: Click to increase image sizeClick to decrease image size Notes * The Guest Editors would like to thank the Editors of this journal for their encouragement and support. Sincere thanks are also due to their respective universities; and to everyone who assisted with and participated in the EUNIP Conference at the University of Porto (2003). Ana Teresa Tavares, Centro de Estudos Macroeconómicos e Previsão, Faculty of Economics, University of Porto, Portugal; e‐mail: [email protected]; Stephen Young, Strathclyde International Business Unit, Strathclyde Business School, Glasgow G4 0RQ, UK; e‐mail: [email protected] Both expressions—firm‐specific advantages (FSAs) and ownership advantages will be used interchangeably. However, Castellani and Zanfei (Citation2003), cited by Dimelis questioned the tendency in the literature to associate high (low) technological gaps with low (high) absorptive capacity. They argued that, due to heterogeneity between firms and sectors, high (low) gaps can be associated with both high and low absorptive capacity. Camagni (Citation2002) differentiates LISs from agglomeration economies: whereas the first generate competitive advantages at firm level, the second merely provide a source of comparative advantage (for more remarks on the distinction between comparative and competitive advantage see Bellak in this Issue). The importance of intangible (strategic) assets as a motivation for FDI in developed economies (Dunning, Citation1993) is now fully recognized. The papers in this Special Issue focus on developed economies, characterized by high labour (and other) costs vis‐à‐vis some developing/emergent locational competitors, so most likely an important part of new investment projects will contain a knowledge‐intensive component. Barry et al. claim that even the replacement of indigenous by foreign firms is unlikely to have adverse linkage effects, given that: R & D expenditure per employee is far greater in foreign industry and in FDI‐intensive sectors; and that does not worsen employment stability. Thus, Barry et al. do not consider there should be big policy concerns re FDI impact on these variables. Exceptions to this generalization are recent papers based on panel data by Haskel et al. (Citation2002) and Keller and Yeaple (Citation2003) that found evidence of positive spillovers. Ruane and Uğur argue that there were a priori several reasons why positive spillovers should be expected in Ireland: consistent FDI promotion and encouragement to link MNEs‐LCs; export orientation: MNEs don't compete with LCs, decreasing thus the likelihood of negative spillovers; high unemployment in Ireland until recently, making crowding‐out less likely; common language and shared culture with the largest inward investor (the US); easy mobility of labour between MNEs and LCs; fewer impediments to imitation. In any case, even if these 'spillover channels' were in place, their findings contradict this expectation. A growing number of countries are implementing supplier development programmes, such as Ireland (National Linkage Programme, mid‐1980s), the Czech Republic (National Supplier Development Programme, 1999), and Hungary (Integrators' Subcontracting Programme, 1998). The results of such programmes have been thought as positive. Lovering's (Citation2003) opinion is that "at the practical level (…) the policy biases in favor of FDI are very rarely based on anything even remotely approaching a thorough and objective empirical examination of its past contribution and future potential impact on the economy as a whole (…). Where such examination has been attempted it has sometimes been rudimentary or flawed". Additional informationNotes on contributorsSTEPHEN YOUNG Footnote* * The Guest Editors would like to thank the Editors of this journal for their encouragement and support. Sincere thanks are also due to their respective universities; and to everyone who assisted with and participated in the EUNIP Conference at the University of Porto (2003). Ana Teresa Tavares, Centro de Estudos Macroeconómicos e Previsão, Faculty of Economics, University of Porto, Portugal; e‐mail: [email protected]; Stephen Young, Strathclyde International Business Unit, Strathclyde Business School, Glasgow G4 0RQ, UK; e‐mail: [email protected]