Developing­Country Multinationals: A Review of the Literature

Third World Multinationals and South Africa’s Decentralization Programme

“…Although there is evidence as far back as the late nineteenth century of the existence of a scatter of companies which might fall under the rubric "Third World multinational", it is generally agreed that the emergence of this kind of enterprise has been a phenomenon of the 1960s and, more particularly, the 1970s (Lall, 1983;Wells, 1983;Linge, 1984). In the contemporary world economy no longer is the art of global reach confined merely to corporations based in developed countries for the number of developing countries whose firms qualify for the appellation 'multinational' steadily has risen over the past decade (Wells, 1977;Heenan and Keegan, 1979;Kumar, 1982).…”

“…In the contemporary world economy no longer is the art of global reach confined merely to corporations based in developed countries for the number of developing countries whose firms qualify for the appellation 'multinational' steadily has risen over the past decade (Wells, 1977;Heenan and Keegan, 1979;Kumar, 1982). Spearheading the drive of multinational investment from the Third World are the broad group of Newly Industrializing Countries, both in Asia and Latin America (Kumar, 1982;Lall, 1983;Linge, 1984). From fragmentary statistical evidence currently available, the leading individual sources are Hong Kong, Brazil and India followed by a second order group composed of Argentina, Mexico, South Korea, Taiwan and Venezuela (Wells, 1978;Lall, 1982aLall, , 1982bLall, , 1983Wells, 1983;Chen, 1984).…”

“…From fragmentary statistical evidence currently available, the leading individual sources are Hong Kong, Brazil and India followed by a second order group composed of Argentina, Mexico, South Korea, Taiwan and Venezuela (Wells, 1978;Lall, 1982aLall, , 1982bLall, , 1983Wells, 1983;Chen, 1984). In total the volume of global investments deriving from Third World sources is a relatively small total of US $10 billion, a share of perhaps three percent in overall foreign direct investment (Lall, 1983;Linge, 1984;Hamilton, 1986). Notwithstanding this small volume, the rise of Third World multinationals has generated considerable scholarly interest.…”

“…The consensus view on Third World multinationals is that their competitive edge rests in small-scale labour-intensive production technologies, in manufacturing undifferentiated price-competitive products and in possessing cheap skilled management which is particularly adept at running businesses in the circumstances of developing countries (Kumar, 1982;Wells, 1983;Linge, 1984;Monkiewicz, 1985). For Wells (1981Wells ( , 1983) the special assets of these firms follow from the peculiar nature of their home markets which are conducive to innovations markedly dissimilar to those that evolve in advanced capitalist economies.…”

“…Accordingly, many Third World multinationals possess 'appropriate technologies' that are mUlti-purpose, labour-rather then capital-intensive and capable of using locally available raw materials and other inputs (Wells, 1981(Wells, , 1983Nambudiri, 1983). Moreover, the fact that these enterprises have much smaller proprietary assets than those of developed country multinationals causes them to display a high propensity for entering into joint venture arrangements with local firms (Lall, 1983;Linge, 1984). Although exceptions to the above caricature undoubtedly exist, Lall concurs that "there is a great deal of validity in this portrayal of Third World MNCs" (Lall, 1983, p. 624 The rise of Third World multinationals has triggered much debate on their differences with those of developed country multinationals.…”