Geography Reference
In-Depth Information
have therefore limited the consideration of externalities to one particular
type and to only one direction; namely, spillovers which are transmitted
from MNEs to the host economy, disregarding the critical link that goes
from region-specific L advantages to the growth of the firm itself.
In addition, it is also rather surprising how the reciprocal interactions
between I and L have so far been almost entirely ignored. Instead, a major
focus of theoretical and empirical research has been on firm growth as a
consequence of the increasing intensity of O and I.
Turning to the different types of MNEs, from the literature the recom-
mendation emerges clearly that it is necessary to move beyond vertical and
horizontal FDI/multinational firms. In the words of Neary 'the distinction
between horizontal and vertical FDI is useful for pedagogic purposes but
otherwise not very helpful.' (Neary 2009, p. 215). Such a distinction reflects
neither the organizational forms of multilocated operations implemented
by MNEs nor the complexity of their functional and territorial integra-
tion strategies, and constrains our understanding of the determinants of
MNE activity exclusively to that of the O advantages. Borrowing from a
Berhman-Dunning's type of classification, it would instead be more suit-
able to capture the contemporary variety and complexity of L advantages
and MNEs' strategies, which nowadays are primarily, although not exclu-
sively, specific-asset and strategic-asset seekers.
As we will see in later chapters, in this topic we adopt a mixed, hetero-
dox and combined approach to MNEs. This allows us to consider MNE
activities well beyond that of simply FDI and also allows us to include
among other features the role of knowledge and technology creation and
diffusion. From this perspective, it becomes clear that while transport and
trade costs have indeed fallen significantly over time, the transactions costs
related to knowledge and technological inputs have not at all fallen, and in
many cases have actually risen over recent decades (McCann 2007, 2008;
Boulhol and de Serres 2010). As such, in knowledge terms the importance
of accessibility to both markets and inputs has increased over recent years
in different ways, thereby encouraging further foreign expansion and a
range of new multinational operations, exactly as we observe empirically.
2.8 CONCLUSIONS
The theories involved, combined and compared within the analytical
framework provided by the eclectic OLI paradigm have been coherently
and powerfully integrated as far as macro- and trade-oriented perspectives
are concerned, giving rise to a strong rationale for the O advantages (the
why multinational?
). Similarly, sound underpinnings for our understand-