Geography Reference
In-Depth Information
8.7 CONCLUSIONS
In this chapter we have seen that the role of multinational affiliates is
increasing globally. One aspect of this is that the R&D and innovation
generation role of MNE affiliates is also increasing, in both the developed
and developing economies, exactly as expected from the arguments pre-
sented in Chapters 4 and 5. In terms of economic geography, global FDI
flows appear to have certain characteristics to them. First, such FDI flows
are still overwhelmingly dominated by the developed economies, both
as destinations for inward FDI and as origins of outward investments.
Moreover, such a leadership has been maintained over recent years during
the current phase of globalization. Second, and consistent with the invest-
ment development path thesis (IDP) discussed in Chapter 2 (Dunning
1981; Dunning and Narula 1996), global FDI inflows into developing
and transition economies are far more important than the global outflows
from such economies, in spite of their increasing share in outward FDI
flows in the most recent years (e.g., Amighini et al. 2009; Athreye and
Kapur 2009). Third, the major MNEs are almost entirely from the devel-
oped areas of the world. Fourth, although the outward flows of FDI from
developing and transition countries are increasing markedly, in absolute
terms these flows are still very small in relative terms, and their destina-
tions are still mainly orientated towards the most developed economies
(Revilla Diez and Kiese 2006). Fifth, greenfield FDI plays a much more
important role in developing countries than M&As, and this is particularly
noticeable in the case of the Asian economies. This is in contrast with the
main modes of foreign investment among the developed economies, for
which mergers and acquisitions represent the major form of multinational
expansion. This supports the fact that the types of MNEs examined in pre-
vious chapters - even when they belong simultaneously to all four broad
categories described in Chapter 2 - differentiate their strategies across dif-
ferent levels of economic development and geography.
These various observations suggest that as the scale of the developing
economies, and the BRIICS economies in particular, increases over the
coming decades, the role which these countries will play in multinational
activity is bound to increase at all levels. Outflows of multinational
investment will increase from these countries into both other develop-
ing economies and also into the developed countries, as MNEs seek new
knowledge assets as well as new resources and markets. Thus, the forms of
FDI outflows from these emerging countries are also likely to increasingly
take the form of mergers and acquisitions in the developed economies,
and of greenfield projects in the lower wage developing countries. Within
these general trends, the growing multinational expansion of firms from
