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Industrial Policy and DevelopmentThe Political Economy of Capabilities Accumulation$
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Mario Cimoli, Giovanni Dosi, and Joseph E. Stiglitz

Print publication date: 2009

Print ISBN-13: 9780199235261

Published to Oxford Scholarship Online: February 2010

DOI: 10.1093/acprof:oso/9780199235261.001.0001

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Nationality of Firm Ownership in Developing Countries: Who Should ‘Crowd Out’ Whom in Imperfect Markets?

Nationality of Firm Ownership in Developing Countries: Who Should ‘Crowd Out’ Whom in Imperfect Markets?

Chapter:
(p.409) 15 Nationality of Firm Ownership in Developing Countries: Who Should ‘Crowd Out’ Whom in Imperfect Markets?
Source:
Industrial Policy and Development
Author(s):

Alice H. Amsden (Contributor Webpage)

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199235261.003.0015

In traditional theory, the nationality of an enterprise shouldn't matter to economic development. Whether a firm is a foreign-owned subsidiary of a multinational (FOE), or a private nationally owned enterprise in the developing world (POE), development will be the same so long as markets are perfect. However, this is no longer the case in markets that are monopolistic. Firms incorporate specific forms of knowledge and the location of ownership contributes to determine technological and production strategies. In these circumstances, the nationality of ownership does matter. Whether a developing economy is dominated by FOEs or POEs, its mid-tech or (mature) high-tech sectors affect the rates of learning and expansion of productive capacity. In fact, the chapter argues that crowding out of POEs by FOEs in such industries is not development friendly.

Keywords:   multinational enterprises, nationally owned enterprises, learning strategies, production strategies, FOE, POE

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