Multinational enterprises: theories, practices, effects and policies

This chapter gives a concise account of what can and should be understood by multinational enterprises (MNEs). Nearly all countries want to attract foreign direct investment (FDI) by MNEs, but on their own terms. Yet, while some countries are the home of many MNEs and attract much FDI, other countries are neither home nor host to MNEs in a significant way. Moreover, although the number of MNEs has constantly grown, not all firms in the world become multinationals. And while some industries are dominated by MNCs, others are not. The study of MNEs involves explaining these differences between firms, industries and nations, and the policy choices they make regarding MNEs. For this purpose, this chapter gives a historical account of theories, practices and policies on MNEs. The authors also shed light on the effects of MNE activity on home and host countries, in particular their impact on the development of the latter. Do MNEs only bring benefits, or also costs? What is the influence on the home countries of MNEs? And what about the impact on host countries? These issues have been dealt with in different ways under changing conditions. This chapter sketches the contours of these major issues and conditions in order to explore their nature and role as well as accounting for their evolution.