Globalization and development: an international business strategy approach

Abstract

The paper seeks to reformulate the ‘colourful and fluid’ early debate on the effects of foreign direct investment (FDI) in two ways. Firstly, the wide range of separate specific concerns of the early debate are subsumed within four generic issues, (i) efficiency, (ii) distribution, (iii) sovereignty, (iv) growth and development. Secondly, the analysis is now structured around modes of analysis of multinational enterprises (MNEs), as the agents that carry out FDI. MNEs are seen as using the freedoms of international transfers central to globalisation in order to leverage competitively the differences of national (or other coherently-defined) economic units. Crucially this response to difference is analysed as reflecting three potential MNE strategic motivations, (i) market seeking, (ii) efficiency seeking, (iii) knowledge seeking. The core of the paper investigates how adoption of different motivations by MNEs would affect performance in terms of the different generic issues. The synergies of this mode of analysis with trade policy (the implicit, or often very explicit, move to outward-oriented industrialisation in the era of globalisation) and new growth theory are also discussed.

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