Exploring the Link between Foreign Direct Investment, Multinational Enterprises and Spillover Effects in Developing Economies

International Journal of Business and Management, Vol. 7, No. 1, January 2012

11 Pages Posted: 3 Mar 2012

See all articles by M. Abdur Rahman Malik

M. Abdur Rahman Malik

Lahore University of Management Sciences (LUMS)

Muhammad Ashraf

Superior University Lahore

Chaudhry Abdul Rehman

Superior University

Dr. Rana Zamin Abbas

University of Management & Technology (UMT), Lahore, Pakistan

Date Written: January 1, 2012

Abstract

Multinational enterprises exist because they hold certain competitive advantages over their local counterparts and affect local economies through their spillover effects. Research streams exploring the raison d’ etre and consequences of MNEs are quite distant and remote. This paper analyzes and integrates these two streams of literature, i.e. the competitive advantages that MNEs hold and their spillover effects in developing countries. The paper proposes a relationship and predicts the nature of spillover effects on the basis of competitive advantages of MNEs. This paper can guide the policymakers of developing countries to differentiate between the FDI that is good for their countries and FDI that weakens the already fragile economies of developing countries. The paper also opens a new avenue for the researchers by pointing towards a potential connection between MNEs’ competitive advantages and their spillover effects for the local economies. The relationship between FDI and competitive advantages of MNEs has rarely been researched previously and thus this paper contributes significantly to the existing literature.

Keywords: Foreign Direct Investment (FDI), Multinational Enterprises (MNEs), Developing economies, Competitive advantages, Spillover effects

JEL Classification: F23

Suggested Citation

Malik, M. Abdur Rahman and Ashraf, Muhammad and Rehman, Chaudhry Abdul and Zamin Abbas, Dr. Rana, Exploring the Link between Foreign Direct Investment, Multinational Enterprises and Spillover Effects in Developing Economies (January 1, 2012). International Journal of Business and Management, Vol. 7, No. 1, January 2012 , Available at SSRN: https://ssrn.com/abstract=2014339

M. Abdur Rahman Malik

Lahore University of Management Sciences (LUMS) ( email )

D.H.A, Lahore Cantt
Lahore, Punjab 54792
Pakistan

Muhammad Ashraf (Contact Author)

Superior University Lahore ( email )

Raiwind Road Lahore
Lahore, Punjab
Pakistan

HOME PAGE: http://www.superior.edu.pk/

Chaudhry Abdul Rehman

Superior University ( email )

Raiwind Road Lahore
Lahore, Punjab 54000
Pakistan

Dr. Rana Zamin Abbas

University of Management & Technology (UMT), Lahore, Pakistan ( email )

C-II,
Lahore, Punjab 54770
Pakistan
92 42 35212801-10 (Phone)
92 42 35212819 (Fax)

HOME PAGE: http://www.umt.edu.pk

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