Professor Rajneesh Narula to present a seminar at the 89th GIST Seminar, Japan
14 May 2018
Professor Rajneesh Narula, of International Business and Strategy, has been invited to speak at the 89th GIST Seminar, Japan on 16th May.
” Why MNEs have little effect on development: applying an extended Lewisian framework”
The early development literature placed great emphasis that development was best achieved by using natural resource sectors for the transition to other sectors. Prior to the import substitution era, MNEs had a habit of internalising the complete value chain and creating enclaves that had few linkages or spillovers locally, and were regarded by policy makers as an obstacle to development. Since liberalisation, extractive MNEs have re-engaged with developing countries through looser governance structures with greater potential for linkages. Despite the potential, few host countries have seen meaningful MNE-led development because of weak domestic firms and poor location advantages. New MNEs from emerging economies have also not shown a greater propensity to local linkages. I present an extended Lewisian multiple economy model which is a novel tool to understand FDI and development and its limitations. It helps to highlight the limits to growth from the informal economy, and why there is a bottleneck that helps explain the failure of countries to transition away from natural resources towards knowledge intensive sectors.