Globalizing Innovation: State Institutions and Foreign Direct Investment in Emerging Economies

Abstract

The impact of host country institutions and policy on innovation by multinational firms in emerging economies. In the past, multinational firms have looked to developing countries as sources of raw materials, markets, or production efficiencies, but rarely as locations for innovation. Today, however, RandD facilities and other indicators of multinational-linked innovation are becoming more common in emerging economies. In this book, Patrick Egan investigates patterns of inward foreign direct investment (FDI) in developing countries, considering the impact of host country institutions and policy on the innovative activities undertaken by multinational firms. He examines the uneven spread of innovation-intensive foreign direct investment and emerging sectoral distributions, then develops a number of arguments about the determinants of multinational innovation in developing countries. Firms are attracted by a country's supply of skilled labor and are often eager to innovate close to new markets, but, Egan finds, host country institutions and the configuration of the host country's investment policies have a strong impact on firm decisions and evolving country investment profiles.