Relationships Between MNEs and Domestic Firms Following FDI: An Assessment on the Literature

Abstract

Understanding the relationship and impact of linkages between MNEs and the local domestic firms is essential for the governments of developing countries that are designing policies aimed at generating maximum benefits from FDI by MNEs. A growing body of research has analyzed the direct and indirect effects of FDI on developing countries, some of which date back to as early as 1999. This paper stems from an ongoing field research project with a global research policy organization on exploring the interactions between MNEs, the eco-systems that they sustain and their interactions with the local and regional governments. Given the privacy of the ongoing research data, at this point we provide a simple recollection of the current state of literature on the addressing the relationships among these companies, their eco-system, and the government. We also deliver a closer look into the technology and knowledge spill-overs following FDI, for assessing the current state of benefiting from linkages between MNE and the local domestic firms. Further insights on the field research outputs will become available during the PICMET Conference.