Geography Reference
In-Depth Information
their own multinational outputs, the knowledge centres controlling their
technological operations are still primarily located in other geographical
arenas, such as the EU and the US. For example, at the end of the 1990s
the bulk of overseas R&D activities of Japanese MNEs - over 90 per
cent - was concentrated in Europe and the US, with a share of around
9 per cent accounted for by other newly industrialized Asian econo-
mies such as Korea and Taiwan (Kumar 2001). Although over the past
decade or so Japanese MNEs have also located their R&D operations in
developing countries, particularly those in East and South Asia such as
China, Indonesia, Malaysia and Thailand, the bulk of their operations
in these countries consists of adaptive R&D, that is adjustment of exist-
ing technologies to the local market conditions (Shimizutani and Todo
2007). Allied with the fact that the EU and US economies still dwarf the
combined economies of both China and India, these observations would
suggest that views of Asia as an example of 'flattening' trends need to be
treated with caution. Moreover, the colossal population shifts from rural
to urban areas and from small towns to major cities in both China and
India demonstrates the increasing convexity (McCann 2008) argument
perfectly. China expects its urban population to double to more than one
billion by 2030 (Heitor 2004; Venables 2006).
In response to the increasing globalizing trends, and also to the need
to take advantage of both the competitive opportunities and technology
transfer possibilities associated with foreign investment, many develop-
ing and transition countries have moved not only towards a progressive
liberalization of their international investment policy regimes, but also
to promote themselves as host locations for inward FDI. In general, the
policies initiated to achieve these goals focus on issues such as reducing
corporate taxes, structural liberalization and deregulation, or the expan-
sion of promotional efforts, as has been extensively undertaken already
in India and Brazil (UNCTAD 2007). In contrast, there is a relatively
small number of cases where governments have moved to restrict foreign
ownership, such as in the case of Russia, where the strategic sectors of the
defence and extraction industries only permit minority foreign ownership
(UNCTAD 2007).
From the perspective of investment managers and decision-makers,
many of the countries with the highest potential for investment returns
also tend to be relatively risky locations. Therefore, international invest-
ment decisions have to consider and weigh the risk-return profiles of lower
labour costs versus greater communication, coordination and transporta-
tion costs. Taking account of all the structural stability and institutional
issues affecting FDI yields, USA is ranked as the number 1 country in
terms of its potential as a location for inward FDI, and all the top 25
