Papers by Rajneesh Narula
International Journal of Emerging Markets, 2018
Purpose The purpose of this paper is to introduce a new theoretical framework called the “extende... more Purpose The purpose of this paper is to introduce a new theoretical framework called the “extended dual economy model”. Based on the seminal work of Lewis (2014), the author uses it to explain the sectoral specialisation of home countries and their firms and MNEs. Design/methodology/approach The paper is multi-disciplinary and entirely conceptual, with cool ideas but very few numbers and equations. Findings Emerging economies exhibit a “duality” in their economic structure that reflects itself in two largely different sets of location (L) characteristics. They are simultaneously home to both “traditional” sectors, which are resource and labour intensive, as well as “modern” sectors, which are knowledge and capital intensive, each of which can be analysed as having two sub-economies. These different sets of location advantages shape the firm-specific advantages of EMNEs and their FDI. Research limitations/implications This analysis helps to underline what shapes the ability of home c...
Despite a well-developed science and technology base and considerable industrial capacity during ... more Despite a well-developed science and technology base and considerable industrial capacity during the soviet era, Russia has largely failed to create a competitive industrial sector despite two decades of transition. This paper seeks to understand why Russia has not succeeded despite having relatively favourable initial conditions. We develop an understanding of its innovation system and the interplay between the firm and the non-firm sector. We argue that, in any economy, when political and economic regimes were rapidly reformed, there is considerable structural inertia associated with complex interdependencies between the state, domestic firms and the formal and informal institutions that bind them together. In the case of Russia, this inertia has resulted in a system-wide lock-in, and industrial enterprises continued to engage in routines that generated a sub-optimal outcome. Market forces did not result in the western-style innovation system, but a hybrid one, with numerous featu...
This paper examines the evidence on developing country MNEs and outward FDI activity. We do not f... more This paper examines the evidence on developing country MNEs and outward FDI activity. We do not find evidence of an across-the-board growth in outward FDI from developing countries, either in magnitude, or geographically. Such growth is a narrow phenomenon, limited to a small group of home countries with relatively well-developed knowledge infrastructure, as well as innovation and business systems. These ‘new’ MNEs have been spurred by greater competition through liberalisation, and have sought to survive by upgrading of their firm-specific assets and one means to do so has been by internationalisation. Broadly speaking, much of the rapid expansion of DC MNE activity from countries such as India is not sustainable. We also discuss the effect of outward FDI on the knowledge base of the home countries of DC MNEs, as well as the role of DC MNEs in promoting South-South capital and knowledge flows. We argue that DC MNEs are not a superior option to conventional MNEs, as there are few di...
This paper explores the impact of MNEs on innovation systems and the policy options available for... more This paper explores the impact of MNEs on innovation systems and the policy options available for peripheral economies to attract and embed the RD the risk of crowding-out of domestic RD the risk of external dependency; and the limitations of protectionist policies. We recommend that governments of peripheral economies focus their efforts on fostering a demand-oriented upgrading of technological capabilities and on stimulating domestic linkages and clusters around MNEs, rather than seeking to attract supply-driven R&D.
Journal of Industrial and Business Economics
We consider how the COVID-19 pandemic has challenged European small- and medium-sized enterprises... more We consider how the COVID-19 pandemic has challenged European small- and medium-sized enterprises (SMEs) in the manufacturing sector, and draw suggests policy implications. The sudden onslaught of the pandemic has acted as an economic shock, and we consider how it is likely to affect different types of manufacturing SMEs. We distinguish between immediate effects, a result of the almost-simultaneous lockdowns across Europe and its major trading partners, and longer-term implications for both SMEs and the global value chains where they are inserted. In the shorter run, most SMEs have faced logistical challenges in addition to demand disruptions, although the severity has differed across firms and industries. We argue that in the longer-term, there will be different challenges and opportunities depending on the type of SME. Policy interventions will also need to be sensitive to the different types of SMEs, rather than adopting a one-size-fits-all approach. The policy mix will need to s...
Research-Technology Management
(UAM), Spain. He serves on the Executive Committee of the European Forum of Studies of Policies f... more (UAM), Spain. He serves on the Executive Committee of the European Forum of Studies of Policies for Research and Innovation (Eu-SPRI Forum) and is a member of the UAM-Accenture Chair in Economics and Management of Innovation. He also acts regularly as a consultant for international organizations such as the Organization for Economic Cooperation and Development, the European Commission, and the World Bank. He holds a PhD in economics from UAM and a master's degree in engineering from Cornell University.
Economia e Politica Industriale
We summarize the key empirical evidence on the nexus between MNEs and development, focusing on is... more We summarize the key empirical evidence on the nexus between MNEs and development, focusing on issues that are relevant for the formulation, implementation and assessment of policies by host developing countries. We also delve into what we do not know, as well as topics for which the evidence is still quite blurred. We discuss the reasons for the absence of clear evidence, and potential avenues for future research to improve policies. Although most countries rely on MNEs/FDI as a central plank of their development strategy, the collective weight of academic research has not led to a fine-tuning of policy implementation. Countries still rely on policies for which evidence is sparse, or no longer valid in an era of globalisation. Much of the literature has focused on externalities and spillovers, and has deemphasised the other 'effects' of MNE activity, implicitly assuming that MNEs are almost always beneficial for development. Few rents are costless when the opportunity costs of scarce resources are considered, especially in the longer term. Despite the abundance of empirical studies (of increasing sophistication), most ignore the significance of structural change. Growth and the interaction with MNE activity is not linear or monotonic over time, because the economy itself is in a constant state of flux.
Multinational Business Review
Purpose This paper aims to discuss the opportunities and limitations that the location-specific a... more Purpose This paper aims to discuss the opportunities and limitations that the location-specific advantages of the home country represent for infant multinational enterprises (MNEs). The systemic weaknesses of the home country can constrain the long-term competitiveness of its firms and, ultimately, the competitiveness of its MNEs. Many emerging countries have a constrained set of location-specific (L) assets from which their firms are able to develop ownership-specific assets. Design/methodology/approach The authors examine data for the case of India, an economy regarded as having considerable potential to expand to knowledge-intensive sectors, using a “systems of innovation” framework, merged with an analysis of L advantages. Findings At the macro level, India’s performance is not different from countries of similar economic structure, and its current pockets of excellence are a reflection of its L assets. The analysis suggests that the failure to foster and upgrade the L assets of...
List of Figures. List of Tables. List of Boxes. Abbreviations. Acknowledgements. Introduction. 1.... more List of Figures. List of Tables. List of Boxes. Abbreviations. Acknowledgements. Introduction. 1. Technology and Globalization as Concatenated Processes: A Brief Commentary on the Causes of Globalization. 2. Cross--border Interdependence between Locations: Learning Growth and Systems of Innovation. 3. Innovation Systems and a Inertiaa in R&D Location: Norwegian Firms and the Role of Systemic Lock--in. 4. Cross--border Interdependence between Firms: The Growth of Strategic Technology Partnering. 5. In--house, R&D, Outsourcing or Alliances? Some Strategic and Economic Considerations. 6. Technological Catch--up and Strategic Technology Partnering in Developing Countries. 7. Technology, Globalization and Policy Issues: Some Observations. Notes. References. Index.
Management International Review, Mar 1, 1993
... the former USSR from Ghana, India from the US, and Japan from Sweden. ... That is to say, CPE... more ... the former USSR from Ghana, India from the US, and Japan from Sweden. ... That is to say, CPEs possess one of the two primary aspects of technology accumulation - the scientific and technicalinformation, but little or no knowledge of markets and their structure. 96 mir vol. ...
I take as a starting point that the location-specific assets of the home country determine to a s... more I take as a starting point that the location-specific assets of the home country determine to a significant degree firm-specific assets of its firms and MNEs. This strong bond persists because of the interdependence between actors within a system, which has a growing cross-border aspect due to globalization. I highlight the importance of institutions, not as a black box of rules, but as an invisible mesh that envelope, shape and constrain the actions of actors in a given system, and these actors are themselves-collectively and occasionally individually-responsible for the nature of institutions. I highlight that location advantages are not always freely available to all actors in a given location. There are important location advantages that are 'members-only' for which access is restricted to incumbents, and do not have a public good nature implied in the IB literature. This lies at the heart of the inertia of firms, and the difficulties of successfully leveraging location-bound assets in other countries, as well as the challenges of 'leaving home', since they may forfeit domestic 'membership' to do so. Home country L assets play a large part in defining EMNE FSAs, and where governments are unable to upgrade these (due to government failure or regulatory capture) it weakens the building block upon which sustainable outward FDI is possible.
Cognition & Emotion, 2002
This paper argues that the East Asian success stories do not owe their growth toliberalised marke... more This paper argues that the East Asian success stories do not owe their growth toliberalised markets and laissez faire industrial policies, but to industrial developmentstrategies that share several similarities to the import-substitution industrialisation (ISI)approach. There are, needless to say, some important fundamental differences whichdetermine why Latin America and East Asia demonstrated such different outcomes, but thesehave become obvious only with
Multinational Business Review, 2015
Purpose – The purpose of this paper is to introduce the debate forum on internationalization moti... more Purpose – The purpose of this paper is to introduce the debate forum on internationalization motives of this special issue of Multinational Business Review. Design/methodology/approach – The authors reflect on the background and evolution of the internationalization motives over the past few decades, and then provide suggestions for how to use the motives for future analyses. The authors also reflect on the contributions to the debate of the accompanying articles of the forum. Findings – There continue to be new developments in the way in which firms organize themselves as multinational enterprises (MNEs), and this implies that the “classic” motives originally introduced by Dunning in 1993 need to be revisited. Dunning’s motives and arguments were deductive and atheoretical, and these were intended to be used as a toolkit, used in conjunction with other theories and frameworks. They are not an alternative to a classification of possible MNE strategies. Originality/value – This paper...
Multinational Business Review, 2015
Purpose – The purpose of this the paper is to review the motives for internationalization to clar... more Purpose – The purpose of this the paper is to review the motives for internationalization to clarify previous arguments and provide a theory-driven classification. Design/methodology/approach – The authors build on behavioral economics and propose a classification of internationalization motives as the result of the interaction among two dimensions, an economics-driven exploitation of existing resources or exploration of new resources, and a psychology-driven search for better host country conditions or avoidance of poor home country conditions. Findings – These two dimensions result in four internationalization motives: sell more, in which the company exploits existing resources at home and obtains better host country conditions; buy better, in which the company exploits existing resources abroad and avoids poor home country conditions; upgrade, in which the company explores for new resources, and it obtains better host country conditions; and escape, in which the company explores ...
There is a growing international dispersion of R&D activities by MNEs for the purposes of maintai... more There is a growing international dispersion of R&D activities by MNEs for the purposes of maintaining and augmenting their knowledge assets. Firms need to tap into alternative knowledge sources , as home countries are rarely able to meet all their technological needs. However, accessing to foreign knowledge implies integration with the host country innovation system that requires considerable time and resources. Although asset-augmenting activities are seen as primarily benefitting the MNE, we argue that home country innovation systems can also benefit from reverse knowledge transfer. Policy makers need to promote these linkages and flows, rather than seeing R&D internationalisation as a threat to the home economy. New knowledge developed abroad by firms can and should be encouraged to be transferred to the rest of the firm and to the local environment of the home country.
This report investigates the location advantages of the Norwegian manufacturing industry while fo... more This report investigates the location advantages of the Norwegian manufacturing industry while focusing on economic as well as institutional factors. The economy relies highly on the exploitation of natural resources and only minor parts of its exports are technology based. Norway as a market for consumer goods is not only small in size but is also located at the periphery of Europe. Since the beginning of industrialisation, policies towards FDI have had two targets. The first has been to keep as much of the resource rent as possible within the country and the second, to develop a domestic manufacturing industry. A variety of political tools has been used to achieve these objectives. Although different international agreements aim to reduce preferences for domestic production, several sectors in the Norwegian manufacturing industry remain protected by governmental policy. Norwegian MNEs have internalised former and present L-advantages into firm-specific assets. Domestic interest groups or the state partly control several of these enterprises. Compared to other small European countries, Norway has a relatively low share of FDI in the manufacturing industry. Nonetheless, over the last decades the country has experienced a substantial increase in FDI. This is partly due to investments of foreign affiliates of Norwegian multinational companies, reinvesting in Norway. In 1996, on an average, 18% of the employment in firms with at least 50 employees was located to foreign controlled firms while the corresponding figures in 1980 and 1991 were 8% and 13%. FDI mainly takes the form of mergers and acquisitions and is particularly significant in sectors with an above average R&D intensity and in other market segments with a relatively high producer concentration. The main industrial clusters as well as the production of consumer goods have experienced the major growth of FDI employment in the period 1991-1996. Often, these are also sectors with a high degree of governmental protection. 1 This report has been financed by the Norwegian Research Council (NFR), partly by grant number 124567/510 and partly by grant number 115671/510. We are grateful to Leo Grunfeld for comments and to Sudha Menon for her assistance in editing the report.
1. FDI and Development: Do we have a new agenda? "Sanjaya Lall, Rajneesh Narula" and &q... more 1. FDI and Development: Do we have a new agenda? "Sanjaya Lall, Rajneesh Narula" and "Rajah Rasiah "2. Will a Trade and Investment Link in the Global Trade Regime be Good for Human Development? "Kamal Malhotra "3. Technology Spillovers from Foreign Direct Investment: An exploration of the active role of MNC subsidiaries in the case of Argentina in the 1990s "Anabel Marin "and "Martin Bell "4. Learning, Upgrading, and Innovation in the South African Automotive Industry "Justin Barnes" and "Jo Lorentzen "5. The Role of the State in Linkage Formation Between TNCs and Local Thai Enterprises "L. Lauridsen "6. Exports and Technological Capabilities: A study of foreign and local firms in the electronics industry in Malaysia, Philippines and Thailand "Rajah Rasiah "7. Using Foreign Investment Strategically for Innovation "Lynn K. Mytelka" and "Lou Anne Barclay "8. Targeting Winners: Can FDI policy extend and improve industrialization? "Michael Mortimore "9. Foreign Direct Investment in Vietnam in Regional Perspective. Are FDI inflows complements or substitutes across borders? "Henrik Hansen, John Rand" and "Finn Tarp "
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Papers by Rajneesh Narula