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Lessons from Foreign Investment in the USA

In: Multinationals, Technology and Exports

Author

Listed:
  • Sanjaya Lall

    (Institute of Economics and Statistics
    Green College)

Abstract

The ruling theory of the multinational corporation (MNC) posits that the possession of firm-specific ‘ownership’ or ‘monopolistic’ advantages is a sine qua non for a firm to produce in a foreign country.2 There are many sorts of imperfections in factor and product markets which can give rise to monopolistic advantages, not all of which are necessarily conducive to overseas production. To give rise to multinational operations, the advantages must, first, provide an edge to the enterprise concerned not only over its rivals at home but also over potential investors in the host country (both local and from third countries). Second, they must be transferable overseas and be exploited most economically at the foreign location. And, third, they must be more profitably exploited by the enterprise itself than by licensing them to an independent firm.

Suggested Citation

  • Sanjaya Lall, 1985. "Lessons from Foreign Investment in the USA," Palgrave Macmillan Books, in: Multinationals, Technology and Exports, chapter 1, pages 1-22, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-17952-7_1
    DOI: 10.1007/978-1-349-17952-7_1
    as

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