Multinational Corporations and Endogenous Growth: An Eclectic-Paradigmatic Analysis

Endogenous growth theory recently originated in economics. Building on this theory, this chapter conceptualizes the phenomenon of endogenous growth in terms of some new ideas developed in the field of international business (IB). These ideas have so far been not linked to the notion of endogenous growth. On the other hand, mainstream economics has not made much progress in exploring the MNC-government relationships through which growth-inducing "mechanics" are created, a topic of great importance and research in the IB-related discipline. Both MNCs and governments complement each other in facilitating an efficient matching of ownership-specific assets (notably knowledge) with location-specific advantages, thereby enabling the developing host countries to realize potential growth I an intensified manner, a new mode of endogenous growth that counteracts the law diminishing returns. The phenomenon of MNC-cum-government-driven endogenous growth is thus conceptualized.