Skip to main content
SpringerLink
Log in

Assessment of the Role of MNCs in the Process of Manufacturing Industry Globalization

  • Conference paper
  • First Online:
Eurasian Economic Perspectives

Part of the book series: Eurasian Studies in Business and Economics ((EBES,volume 10/2))

  • 471 Accesses

Abstract

The development of economic globalization is commonly linked to the activities of multinational companies (MNCs) that are the main participants of the process of globalization. Activities of MNCs are very prominent in the manufacturing industry. MNCs that operate in manufacturing transfer their production to foreign countries that are closer to raw materials, labor resources or consumers in order to reduce production costs or find new sales markets. In this way, manufacturing MNCs “push” the process of globalization and have a significant impact on the development of manufacturing in host countries. Considering the expansion of international production and trade, manufacturing MNCs can be treated as the key channel for the transmission of globalization. This paper analyzes the role of MNCs in the process of manufacturing globalization applying the concept of cause and effect. After the analysis of the nature of MNCs’ activities, two groups of indicators have been selected and systematized following the cause and effect attitude: (1) the indicators that reflect the input of MNCs in the process of manufacturing industry globalization; (2) the indicators of manufacturing development that reflect the impact of globalization transmitted through the channel of MNCs. On the basis of indicators selected, the empirical research is conducted on an example of a small open economy.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  • Agosin, M. R., & Machado, R. (2005). Foreign investment in developing countries: Does it crowd in domestic investment? Oxford Development Studies, 33(2), 149–162.

    Article  Google Scholar 

  • Altomonte, C., Saggiorato, L., & Sforza, A. (2012). TNCs’ global characteristics and subsidiaries’ performance across European regions. Transnational Corporations, 21(2), 1–20.

    Article  Google Scholar 

  • Artuc, E., Docquier, F., Özden, Ç., & Parsons, C. (2015). A global assessment of human capital mobility: The role of non-OECD destinations. World Development, 65, 6–26.

    Article  Google Scholar 

  • Baccini, L., Pinto, P. M., & Weymouth, S. (2015). The distributional consequences of globalization: Firm-level evidence from US trade agreements. Accessed June 10, 2017, from http://faculty.msb.edu/sw439/documents/Baccini%20Pinto%20Weymouth%20MNCs.pdf

  • Bems, R., Johnson, R. C., & Yi, K. (2011). Vertical linkages and the collapse of global trade. The American Economic Review, 101(3), 308–312.

    Article  Google Scholar 

  • Bjelić, P. (2013). New approach in international trade analysis due to international factor movements. Zbornik Radova Ekonomskog Fakulteta u Istočnom Sarajevu, 7, 17–29.

    Google Scholar 

  • Bossard, A. B., & Peterson, R. B. (2005). The repatriate experience as seen by American expatriates. Journal of World Business, 40(1), 9–28.

    Article  Google Scholar 

  • Brakman, S. (2006). Nations and firms in the global economy: An introduction to international economics and business. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  • Broda, C., Greenfield, J., & Weinstein, D. (2006). From groundnuts to globalization: A structural estimate of trade and growth. NBER Working Paper, 12512. Accessed October 12, 2016, from http://www.nber.org/papers/w12512.pdf

  • Buckley, P. J. (2009). The impact of the global factory on economic development. Journal of World Business, 44(2), 131–143.

    Article  Google Scholar 

  • Buckley, P. J., & Ghauri, P. N. (2004). Globalisation, economic geography and the strategy of multinational enterprises. Journal of International Business Studies, 35(2), 81–98.

    Google Scholar 

  • Buckley, P. J., Clegg, J., Forsans, N., & Reilly, K. T. (2001). Increasing the size of the “country”: Regional economic integration and foreign direct investment in a globalised world economy. MIR: Management International Review, 41(3), 251–274.

    Google Scholar 

  • Carneiro, J., Salter, S. B., & Punnett, B. J. (2015). Local responses to global challenges: Lessons from small economies. Journal of Business Research, 68(12), 2588–2592.

    Article  Google Scholar 

  • Casi, L., & Resmini, L. (2012). Globalization, foreign direct investments and growth in European regions: An empirical assessment. In R. Capello & T. P. Dentinho (Eds.), Globalization trends and regional development (pp. 95–126). Cheltenham: Edward Elgar.

    Google Scholar 

  • Castells, M. (2011). The rise of the network society: The information age: Economy, society, and culture (2nd ed.). Oxford: Wiley.

    Google Scholar 

  • Collings, D. G. (2014). Integrating global mobility and global talent management: Exploring the challenges and strategic opportunities. Journal of World Business, 49(2), 253–261.

    Article  Google Scholar 

  • Cottier, T., & Sieber-Gasser, C. (2015). Labour migration, trade and investment: From fragmentation to coherence. In M. Panizzon, G. Zurcher, & E. Fornale (Eds.), The Palgrave handbook of international labour migration (pp. 41–60). Hampshire: Palgrave Macmillan.

    Chapter  Google Scholar 

  • Delogu, M., Docquier, F., & Machado, J. (2014). The dynamic implications of liberalizing global migration. CESifo Working Paper Series No. 4596.

    Google Scholar 

  • Docquier, F., Ozden, Ç., & Peri, G. (2014). The labour market effects of immigration and emigration in OECD countries. The Economic Journal, 124(579), 1106–1145.

    Article  Google Scholar 

  • Dunning, J. H. (2013). International production and the multinational enterprise (RLE international business) (2nd ed.). London: Routledge.

    Book  Google Scholar 

  • Dunning, J. H. (2014). Economic analysis and multinational enterprise (3d ed.). London: Routledge.

    Book  Google Scholar 

  • Dunning, J. H., & Lundan, S. M. (2008). Multinational enterprises and the global economy (2nd ed.). Edward Elgar.

    Google Scholar 

  • Epstein, G. (2003). The role and control of multinational corporations in the world economy. In J. Michie (Ed.), The handbook of globalisation (pp. 150–164). Cheltenham: Edward Elgar.

    Google Scholar 

  • European Commission. (2010). An integrated industrial policy for the globalisation era. Putting competitiveness and sustainability at centre stage. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. Accessed January 5, 2017, from http://ec.europa.eu/enterprise/policies/industrial-competitiveness/industrial-policy/files/communication_on_industrial_policy_en.pdf

  • Feenstra, R. C. (2015). Advanced international trade: Theory and evidence (2nd ed.). Princeton: Princeton University Press.

    Google Scholar 

  • Ford, T. C., Rork, J. C., & Elmslie, B. T. (2008). Foreign direct investment, economic growth, and the human capital threshold: Evidence from US states. Review of International Economics, 16(1), 96–113.

    Article  Google Scholar 

  • Gersbach, H. (2002). Does and how does globalisation matter at the industry level? The World Economy, 25(2), 209–229.

    Article  Google Scholar 

  • Grogaard, B., Gioia, C., Benito, G., & Robertstad, G. (2005). An empirical investigation of the role of industry factors in the internationalization patterns of firms. SMG Working Paper, 9. Accessed December 25, 2016, from http://openarchive.cbs.dk/xmlui/bitstream/handle/10398/7477/cbs%20forskningsindberetning%20smg%2029.pdf

  • Grogger, J., & Hanson, G. H. (2011). Income maximization and the selection and sorting of international migrants. Journal of Development Economics, 95(1), 42–57.

    Article  Google Scholar 

  • Grossmann, V., & Stadelmann, D. (2013). Wage effects of high-skilled migration: International evidence. The World Bank Economic Review, 27(2), 297–319.

    Article  Google Scholar 

  • Hausmann, R., & Fernandez-Arias, E. (2000). Foreign direct investment: Good cholesterol? Inter-American Development Bank Papers. Accessed June 14, 2016, from http://www.econstor.eu/bitstream/10419/87989/1/idb-wp_417.pdf

  • Helpman, E. (2006). Trade, FDI, and the organization of firms. Journal of Economic Literature, 44(3), 589–630.

    Article  Google Scholar 

  • Herrigel, G., & Zeitlin, J. (2010). Inter-firm relations in global manufacturing: Disintegrated production and its globalization. In G. Morgan, J. L. Cambel, C. Crouch, O. Pedersen Kaj, & R. Whitley (Eds.), The Oxford handbook of comparative institutional analysis (pp. 527–564). Oxford: Oxford University Press.

    Google Scholar 

  • Hu, A. G. (2004). Multinational corporations, patenting, and knowledge flow: The case of Singapore. Economic Development and Cultural Change, 52(4), 781–800.

    Article  Google Scholar 

  • Ietto-Gillies, G. (2003). The role of transnational corporations in the globalisation process. In J. Michie (Ed.), The handbook of globalisation (pp. 139–149). Cheltenham: Edward Elgar.

    Google Scholar 

  • Ietto-Gillies, G. (2012). Transnational corporations and international production: Concepts, theories and effects (2nd ed.). Cheltenham: Edward Elgar.

    Google Scholar 

  • Jensen, N. M. (2013). Domestic institutions and the taxing of multinational corporations. International Studies Quarterly, 57(3), 440–448.

    Article  Google Scholar 

  • Karuppiah, M., & Karthikeyan, R. (2013). Impact of globalisation on growth of firms: An empirical analysis of Indian manufacturing industry. Asian Journal of Research in Business Economics and Management, 3(1), 170–180.

    Google Scholar 

  • Katz, R., Lawrence, R. Z., & Spence, M. (2011). Manufacturing globalization. Foreign Affairs, 90(6), 166–171.

    Google Scholar 

  • Keller, W. (2004). International technology diffusion (pp. 752–782). XLII: Journal of Economic Literature.

    Google Scholar 

  • Kletzer, L. G. (2005). Globalization and job loss, from manufacturing to services. Economic Perspectives, 29(2), 38–46.

    Google Scholar 

  • Kozul-Wright, R., & Rowthorn, R. (1998). Spoilt for choice? Multinational corporations and the geography of international production. Oxford Review of Economic Policy, 14(2), 74–92.

    Article  Google Scholar 

  • Krugman, P. R. (2007). Trouble with trade. The New York Times, December 28, p. A23. Accessed October 20, 2016, from http://www.nytimes.com/2007/12/28/opinion/28krugman.html

  • Kwok, C. C., & Tadesse, S. (2006). The MNC as an agent of change for host-country institutions: FDI and corruption. Journal of International Business Studies, 37(6), 767–785.

    Article  Google Scholar 

  • Landefeld, J. S., & Kozlow, R. (2003). Globalization and multinational companies: What are the questions, and how well are we doing in answering them? Statistical Journal of the United Nations Economic Commission for Europe, 20(2), 111–120.

    Google Scholar 

  • Lévy, B. (2007). The interface between globalization, trade and development: Theoretical issues for international business studies. International Business Review, 16(5), 594–612.

    Article  Google Scholar 

  • Lithuanian Department of Statistics. (2017). Official statistics portal. Accessed June 14, 2017, from https://www.stat.gov.lt/home

  • Lynch, D. A. (2010). Trade and globalization: An introduction to regional trade agreements. Plymouth: Rowman and Littlefield.

    Google Scholar 

  • Marchiori, L., Shen, I., & Docquier, F. (2013). Brain drain in globalization: A general equilibrium analysis from the sending countries’ perspective. Economic Inquiry, 51(2), 1582–1602.

    Article  Google Scholar 

  • Moura, R., & Forte, R. (2010). The effects of foreign direct investment on the host country economic growth-theory and empirical evidence. FEP Working Papers, 390. Accessed January 6, 2017, from http://www.fep.up.pt/investigacao/workingpapers/10.11.02_wp390.pdf

  • Mukherjee, I. (2008). Impact of globalization on international trade. ICFAI Journal of International Business, 3(1), 28–45.

    Google Scholar 

  • OECD. (2005). Measuring globalisation. OECD handbook on economic globalisation indicators. Paris: OECD Publishing.

    Google Scholar 

  • Osinubi, T., & Amaghionyeodiwe, L. A. (2010). Foreign private investment and economic growth in Nigeria. Review of Economic and Business Studies (REBS), 5, 105–127.

    Google Scholar 

  • Özden, Ç., Parsons, C. R., Schiff, M., & Walmsley, T. L. (2011). Where on earth is everybody? The evolution of global bilateral migration 1960–2000. The World Bank Economic Review, 25(1), 12–56.

    Article  Google Scholar 

  • Özkan-Günay, E. N. (2011). Determinants of FDI inflows and policy implications: A comparative study for the enlarged EU and candidate countries. Emerging Markets Finance and Trade, 47(4), 71–85.

    Article  Google Scholar 

  • Ozturk, I. (2007). Foreign direct investment-growth nexus: A review of the recent literature. International Journal of Applied Econometrics and Quantitative Studies, 4(2), 79–98.

    Google Scholar 

  • Peiperl, M., Levy, O., & Sorell, M. (2014). Cross-border mobility of self-initiated and organizational expatriates: Evidence from large-scale data on work histories. International Studies of Management and Organization, 44(3), 44–65.

    Article  Google Scholar 

  • Pekarskiene, I., & Susniene, R. (2014). The assessment of the manifestation of economic globalization: The international trade factor. Procedia-Social and Behavioral Sciences, 156, 392–397.

    Article  Google Scholar 

  • Pekarskiene, I., & Susniene, R. (2015). Features of foreign direct investment in the context of globalization. Procedia-Social and Behavioral Sciences, 213, 204–210.

    Article  Google Scholar 

  • Pekarskiene, I., Laskiene, D., Saboniene, A., & Susniene, R. (2017). The impact of economic globalization on the labor market of an open small economy. Financial environment and business development (pp. 199–216). Springer International Publishing.

    Google Scholar 

  • Pla-Barber, J., & Puig, F. (2009). Is the influence of the industrial district on international activities being eroded by globalization? Evidence from a traditional manufacturing industry. International Business Review, 18(5), 435–445.

    Article  Google Scholar 

  • Prasad, E. S., Rajan, R. G., & Subramanian, A. (2007). Foreign capital and economic growth, NBER Working Paper, 13619. Accessed February 10, 2017, from http://www.econstor.eu/bitstream/10419/34518/1/55264496X.pdf

  • Puig, F., & Marques, H. (2011). Territory, specialization and globalization in European manufacturing. London: Routledge.

    Google Scholar 

  • Rugman, A. M. (2012). The end of globalization. London: Random House.

    Google Scholar 

  • Savvides, A., & Zachariadis, M. (2005). International technology diffusion and the growth of TFP in the manufacturing sector of developing economies. Review of Development Economics, 9(4), 482–501.

    Article  Google Scholar 

  • Sirgy, M. J., Lee, D., Miller, C., & Littlefield, J. E. (2004). The impact of globalization on a country’s quality of life: Toward an integrated model. Social Indicators Research, 68(3), 251–298.

    Article  Google Scholar 

  • Sofka, W., Preto, M. T., & Faria, P. (2014). MNC subsidiary closures: What is the value of employees’ human capital in new jobs? Journal of International Business Studies, 45, 723–750.

    Article  Google Scholar 

  • Soubbotina, T. P., & Sheram, K. (2000). Beyond economic growth: Meeting the challenges of global development. World Bank Publications. Accessed January 29, 2017, from http://www.worldbank.org/depweb/beyond/beyond.htm#english

  • Sumner, A. (2004). Why are we still arguing about globalization? Journal of International Development, 16(7), 1015–1022.

    Article  Google Scholar 

  • Sutcliffe, B., & Glyn, A. (2003). Measures of globalisation and their misinterpretation. In J. Michie (Ed.), The handbook of globalisation (pp. 61–78). Cheltenham: Edward Elgar.

    Google Scholar 

  • The World Bank Group. (2017). World Bank Open Data. Accessed April 18, 2017, from http://data.worldbank.org/

  • UNCTAD. (2002). World investment report. Transnational corporations and export competitiveness. New York: United Nations.

    Google Scholar 

  • UNCTAD. (2009). World investment report. Transnational corporations, agricultural production and development. New York: United Nations.

    Google Scholar 

  • UNCTAD. (2011). World investment report. Non-equity modes of international production and development. United Nations: New York.

    Google Scholar 

  • UNCTAD. (2012). World investment report. Towards a new generation of investment policies. United Nations: New York.

    Google Scholar 

  • UNCTAD. (2013). World investment report. Global value chains: Investment and trade for development. New York: United Nations.

    Google Scholar 

  • UNCTAD. (2014). World investment report. Investing in the SDGs: An action plan. New York: United Nations.

    Google Scholar 

  • UNCTAD. (2015). World investment report. Reforming international investment governance. United Nations: New York.

    Google Scholar 

  • UNCTAD. (2016). World investment report. Investor nationality: Policy challenges. Geneva: United Nations.

    Google Scholar 

  • UNCTADstat. (2017). Data center. Accessed May 28, 2017, from http://unctadstat.unctad.org/EN/Index.html

  • Vetter, S. (2014). Recent trends in FDI activity in Europe. Deutch Bank Research. Accessed April 7, 2017, from https://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000340841/Recent+trends+in+FDI+activity+in+Europe%3A+Regaining.pdf

  • Veugelers, R., & Cassiman, B. (2004). Foreign subsidiaries as a channel of international technology diffusion: Some direct firm level evidence from Belgium. European Economic Review, 48(2), 455–476.

    Article  Google Scholar 

  • Wagner, S. M. (2013). Why do MNEs engage in MNE–Government relations? Empirical evidence from the European Union and the automotive industry. In G. Cook & J. Johns (Eds.), The changing geography of international business (pp. 54–76). Basingstoke: Palgrave Macmillan.

    Chapter  Google Scholar 

  • Xu, Y. (2012). Understanding international trade in an era of globalization: A value-added approach. Policy Analysis. Accessed January 6, 2017, from http://www.aspeninstitute.org/sites/default/files/content/upload/Understanding%20International%20Trade_0.pdf

  • Xu, B., & Chiang, E. P. (2005). Trade, patents and international technology diffusion. The Journal of International Trade and Economic Development, 14(1), 115–135.

    Article  Google Scholar 

  • Yamin, M., & Sinkovics, R. R. (2009). Infrastructure or foreign direct investment?: An examination of the implications of MNE strategy for economic development. Journal of World Business, 44(2), 144–157.

    Article  Google Scholar 

  • Young, S., & Hood, N. (2000). Globalization, multinational enterprises and economic development. In S. Young & N. Hood (Eds.), The globalization of multinational enterprise activity and economic development (pp. 3–20). London: Macmillan Business.

    Google Scholar 

  • Zilinske, A. (2010). Incoming foreign investment: Holly water or menu of potential troubles. Engineering Economics, 21(5), 518–524.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Economics and Business, Kaunas University of Technology, Kaunas, Lithuania

    Irena Pekarskiene, Rozita Susniene, Asta Saboniene & Akvile Cibinskiene

Authors
  1. Irena Pekarskiene
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Rozita Susniene
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Asta Saboniene
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Akvile Cibinskiene
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Irena Pekarskiene .

Editor information

Editors and Affiliations

  1. Faculty of Political Sciences, Istanbul Medeniyet University, Istanbul, Turkey

    Mehmet Huseyin Bilgin

  2. MUFG Union Bank, San Francisco, CA, USA

    Hakan Danis

  3. Faculty of Tourism, Istanbul Medeniyet University, Istanbul, Turkey

    Ender Demir

  4. Eurasia Business & Economic Society, Fatih, Istanbul, Turkey

    Ugur Can

Rights and permissions

Reprints and permissions

Copyright information

© 2019 Springer Nature Switzerland AG

About this paper

Check for updates. Verify currency and authenticity via CrossMark

Cite this paper

Pekarskiene, I., Susniene, R., Saboniene, A., Cibinskiene, A. (2019). Assessment of the Role of MNCs in the Process of Manufacturing Industry Globalization. In: Bilgin, M., Danis, H., Demir, E., Can, U. (eds) Eurasian Economic Perspectives. Eurasian Studies in Business and Economics, vol 10/2. Springer, Cham. https://doi.org/10.1007/978-3-030-11833-4_8

Download citation

Publish with us

Policies and ethics

Search

Navigation