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The international financial crisis and transnational corporation strategy
- Source: Transnational Corporations, Volume 20, Issue 1, May 2013, p. 103 - 116
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- 01 May 2013
Abstract
As is well-known to readers of this journal, foreign direct investment (FDI) is undertaken by transnational corporations (TNCs). In many ways FDI is not a financial investment decision, rather it is a micro-level, firm-driven, strategy decision. Thus FDI and TNC strategy need to be carefully distinguished from financial (portfolio) investment decisions which are country-level, macroeconomic, decisions. This distinction between FDI and portfolio investment has eluded many commentators on the international financial crisis. For example, although large banks and financial institutions are types of TNCs, their firm-level strategic FDI decisions need to be distinguished from country-level macroeconomic trade and financial imbalances. In this paper, we attempt to work through the logic of this distinction between FDI and portfolio investment to analyse the international financial crisis.
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