Geography Reference
In-Depth Information
integration, namely HFDI and VFDI, are likely in many cases to follow
rather distinct locational patterns.
In many ways, some of the most important recent insights for our under-
standing of the L advantages of MNEs have therefore come about from
the microeconomic approaches represented by the NEG, whereas most of
the breakthroughs on the O and I advantages have come from the inter-
national business and management literature. However, in terms of the
explicitly spatial behaviour of multinational firms at the sub-national level,
even the NEG has also shown some serious limitations. The reason is that
neither framework deals simultaneously and explicitly with the geographi-
cal, organizational and institutional variations which are typical of sub-
national contexts. While the NTT/KCM tradition tends to focus on either
two-country or three-country home versus foreign market type cases, in
which the internal structure of each country is treated as being effectively
homogeneous, the NEG models often prefer to subsume all such differ-
ences in terms of an 'iceberg' type specification of transport-distance costs.
At the same time, in cases where NEG models attempt to analyse spatial
variations in the internal structure of countries, they do not account for the
variations in MNE multiplant multi-function characteristics.
2.6
THE EFFECTS OF MULTINATIONAL
ACTIVITY: EXTERNALITIES, SPILLOVERS AND
DEVELOPMENT
As highlighted above, along with the interest in understanding the deter-
minants of MNE activity, many questions regarding the effects of mul-
tinational presence on host economies have always been at the core of
the attention of economists and international business theorists, as well
as of other social science scholars. In order to be able to assess if MNEs
are overall advantageous or disadvantageous to host economies, differ-
ent theoretical perspectives have been adopted which analyse the issue
from the point of view of either the home or the host economy or that of
the MNE itself. One of the major issues discussed is that of the externali-
ties and, particularly, potential 'spillovers' generated and diffused by the
MNEs in the host economy. To go into depth in the understanding of
when and where spillovers may or may not occur it is necessary to have a
thorough discussion on the concepts of location strategies, knowledge and
information sources, technological change, and their spatial dimensions.
These discussions will be the focus of Chapters 3 to 5 in this topic. In what
follows here some of the remaining conclusions in the literature regarding
the impact of MNE activity are reported.