Multinational Enterprises, New Technologies and Export-Oriented Industrialization in Developing Countries: Trends and Prospects

A good deal of theoretical and empirical literature has debated the role of MNEs in the expansion of manufactured exports from developing countries. Prevailing opinion is that MNEs have played an important role in the rapid growth of manufactured exports of Asian NTEs. Empirical studies, however, have reported mixed findings on their role. This is because countries differ in the extent of export-oriented foreign direct investment (FDI) and subcontracting of production attracted from MNEs. Export-oriented FDI and subcontracting arise in the process of rationalization of production, according to international differences in the factor prices undertaken by MNEs. The relocation of production was an important trend in the 1970s, but has slowed since the mid-1980s, with the evolution of new technologies such as flexible automation and other developments in computer integrated manufacturing. This paper examines recent trends and patterns in export-oriented FDI inflows in developing countries. Inter-industry trends are examined as well as inter-country patterns in the export orientation of the overseas affiliates of US and Japanese MNEs. Recent trends in overseas production by developing country enterprises which have recently emerged as significant sources of export-oriented FDI are also summarized. The paper concludes with a discussion of the future prospects and implications for developing countries seeking to tap MNE's resources for promoting their manufactured exports.