Foreign direct investment and economic integration

Abstract

In this paper, we explore the role of foreign direct investment (FDI) on the competitiveness of emerging economies and economic integration. We structure the paper as follows. Following this Introduction (Section I), in Section II, we assess briefly and critically extant theories of FDI and the MNE. In Section III, we critically assess competitiveness and catching-up theory and policy and the role of FDI in this context. Section IV sets off from limitations of extant scholarship identified in the previous section to develop a novel framework for competitiveness and catching-up and discuss the role of FDI, clusters and government policy in its context. Section V discusses ways through which emerging economies can effect economic integration through enhanced competitiveness and accelerated catching-up, by leveraging strategies informed from recent developments on scholarship in International Business (IB) strategy. Section VI summarizes and concludes.