Transnational Corporations - Volume 28, Issue 2, 2021

The current stage of globalization involves geographically dispersed research and development (R&D) investments that are not confined to advanced economies. These cross-border R&D investments are driven by multinational enterprises’ (MNEs’) strategies for exploring and/or exploiting foreign locations. In this paper, we analyse location choice and the moderating effect of project-level investment strategy (i.e. exploration or exploitation) and type of host economy (i.e. advanced or emerging) on the importance of the innovation framework and local innovation capabilities. Our analysis of 588 R&D-related foreign direct investment (FDI) projects in the pharmaceutical and biotech industries during the 2006–2016 period reveals that whereas a host country’s innovation framework and capability overall do affect the location decision, their ultimate effects are conditional on the combination of project-level investment strategy and type of economy. Our findings have policy implications for FDI policies aiming at enhancing linkages between MNEs and local actors and national science, technology, innovation and educational policies and programmes.

Direct exporting activities and outward foreign direct investment (OFDI) are two types of internationalization that differ in firms’ opportunities, resources and risks. We study home-country institutional factors for internationalization and empirically investigate the direct and joint effects of export regulations, credit markets and corruption in explaining exporting and OFDI from a country. Using country-level data from 96 developed and developing countries between 2000 and 2018, we test a series of hypotheses and examine nonlinearity in the relationships. The results of the study suggest that export regulations partially affect exporting but do not affect OFDI. Access to financial resources can be critical in parts for both exports and OFDI. The findings also show that corruption can have different implications for exports and OFDI. The interactions of corruption with export regulations and credit markets reveal some unexpected and counter-intuitive results, highlighting the importance of distinguishing between the direct and indirect (joint) effects of business environment factors and corruption on exports and OFDI. The results of the study contain important information for policymakers.

The COVID-19 pandemic is expected to trigger a reconfiguration of global value chains according to four alternative trajectories: reshoring, regionalization, replication and diversification. This paper focuses on the first two scenarios. On the basis of a review of the extant reshoring literature and policies implemented in several major developed and emerging economies, we present a comprehensive framework to classify and analyse the evolution of such policies before and after the pandemic. The paper develops some policy recommendations suggesting that reshoring policies need to be supported by and combined with industrial policies enforcing the competitiveness and sustainability of production systems.

This paper investigates the dynamic relationship between perceived corruption and foreign direct investment (FDI) in Egypt during the period 1970–2019. Using a novel back-casting methodology, it extrapolates perceived corruption time series between 1970 and 1980. The results of the Johansen cointegration technique and the multivariate vector error correction model show a positive relationship between perceived corruption and FDI, supporting the “greasing the wheels” effect of corruption. This positive association can be explained by several factors, such as the cross-interdependence of rent-generating assets with perceived corruption and FDI, and the use of FDI data based on the balance of payments that has growing financial-flows and phantom-FDI components. The findings of this paper have important policy implications. Improving the fundamental governance structure in Egypt should be accompanied by a comprehensive investment facilitation strategy to compensate for the removal of “grease” from the “wheels”.

This article seeks to explain recent decisions by countries to terminate their existing bilateral investment treaties (BITs) and revisit their commitment to future international investment agreements (IIAs). It argues that BITs, transnational corporations (TNCs), host States and international arbitration institutions form a decentralized system of global governance of foreign direct investment (FDI), based on insights from the fields of international political economy and international law, and that the nonmarket strategies of these TNCs have not only shaped the contours of this system but have also prompted host States to reform this system, from the perspective of a “political bargaining model”. The article illustrates this argument through the case of South Africa, which terminated its BITs with several European countries as a response to cases of investor–State dispute settlement (ISDS) and has sought to redefine its engagement with this system of global governance as a result.

This paper offers preliminary evidence of the extent to which global FDI patterns have responded to the sharp increase in trade barriers since 2018, focusing in particular on the impact of new United States tariffs imposed on imports from China. Using detailed project-level data on new greenfield FDI as well as complementary research, this paper tracks the differential changes in FDI across countries and industries most affected by the trade tensions. There is some evidence of diversion to South-East Asia in specific industries, confirming findings of other research, but the aggregate effect on investment in China is limited and the overall effect on investment in South-East Asia is actually negative. A possible explanation lies in the importance of global value chain linkages as key determinants of firms’ investment decisions.