In view of the rapid increase of outward foreign direct investment (OFDI) from emerging economies in recent years, this study examines how OFDI supports economic development in the world's less advanced home countries. Drawing on theories of FDI, available literature of relevance and some recent evidence from emerging economies, this study finds that the objective of multinational enterprises to pursue assets and advantages abroad through OFDI can yield financial, intangible capability and tangible capacity returns. In the right circumstances, these returns generate important macroeconomic gains, mitigate some of the typical problems of economic development and provide broader benefits to societies. Despite some limitations, OFDI complements, sometimes in distinct ways, the development benefits many countries already realise through trade, migration and inward FDI. Emerging economies are best placed to benefit from the returns generated by OFDI.
If citing, it is advised that you check and use the publisher's definitive version for pagination, volume/issue, and date of publication details. And where the final published version is provided on the Research Portal, if citing you are again advised to check the publisher's website for any subsequent corrections.
Purpose
The purpose of this paper is to analyze how path dependence in the evolution of major theories of foreign direct investment (FDI) locked in a theoretical perspective of the multinational enterprise that focused on asset-exploitation. This perspective is challenged by recent contradicting observations of multinationals from China and other emerging economies. A decisive re-orientation of FDI theory is proposed as a way forward to resolve this tension.
Design/methodology/approach
Placing FDI theories into the context of FDI patterns prevailing at the time they were developed, Thomas Kuhn’s framework on the evolution of scientific knowledge is employed to track how the mainstream FDI theory emerged, went through a period of normal science and then approached a crisis of science in this field.
Findings
The evolution of FDI theory is strongly path-dependent, which made it difficult for theory to effectively incorporate new conceptual discoveries and empirical findings about the nature of FDI activity.
Originality/value
FDI theory would benefit from a full re-orientation to a demand-oriented perspective which places the pursuit of advantages, assets, resources, etc., at the core of the theory. Such a change is implicit in many recent theoretical advances and would assure theory is generalizable to all types of FDI.
This study examines why a large number of Western advanced economies joined the China-led Asian Infrastructure Investment Bank (AIIB) in 2015 despite the bank’s purported challenge to the Western-centred international order in the area of multilateral development finance. Through a mixed-method examination involving elite interviews, analyses of government pronouncements and regressions, and by drawing on concepts from rational choice theory, international policy diffusion, and rational design of international institutions, this study finds that the AIIB’s success with regard to its large membership is due to China’s effective creation of a demand for the organization among Western advanced economies. We argue that policymakers in Western countries enjoyed ‘induced agency’, which China granted them in the process of creating the organization and deciding about its membership. First, Western advanced economies had agency because their involvement was needed to prevent the AIIB from becoming a homogenous small organization consisting of Asian debtor countries in favour of a global organization with a heterogeneous group of both debtor and creditor country members. The AIIB was thus set up to accommodate the specific economic and political goals of Western advanced economies. Secondly, Western advanced economies experienced agency in the process of deciding about their membership in the bank because China proactively courted them to join the AIIB. China moreover endorsed the spontaneous intensification of communications that ensued among Western advanced economies with regard to joining the AIIB. Both efforts ultimately resulted in diffusion among them of the decision to become members. Thirdly, the Western advanced economies were granted agency in the process of determining the AIIB’s organizational design, thus allowing them to converge the initially diverse visions for the institutional design of the bank and shift it from contesting the existing system of multilateral development banks to effectively integrating into it. Our study thus advances a theory of country-specific demand for membership in an international organization.
This study seeks to explain the profound discord currently observable in elite political discourse on Chinese investments in many host countries. Using Argentina as a case study, a combination of quantitative content analysis and qualitative discourse analysis was employed to analyze parliamentary speeches on a controversial spacemonitoring station built there by China in 2015. The study finds that the competing discourses about China in Argentinean politics draw primarily on locally embedded contexts and the region's particular historical experiences and geopolitical position. These local narratives are used in different ways by both sides of the debate to support contradicting positions on relevant issues. Questions of regional hegemony, centerperiphery relations, national autonomy as well as Peronist and anti-Peronist ideologies are being drawn on by elite politicians in an attempt to cope with the deep uncertainty about what China's increased engagement means for the country and to compensate for the lack of predictability about China's behavior in its future role as a major global power. Ultimately, however, Argentina's elite politicians end up in a dilemma in which these narratives and historical memories can be spun in both ways to either support or reject a controversial investment project to go ahead on domestic soil that is, at the same time, a symbolic test for the potential depth of the future relationship with China.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.