The New Globalism and Developing Countries

John H. Dunning, Khalil A. Hamdani
Release Date: July 1, 1997

The global economy of the 1990s is being driven by cross-border direct investments and cooperative business ventures on an unprecedented scale. Not only is international investment growing faster than world output and trade, but an increasing share of the markets for goods and services, capital and technology, is being intermediated by transnational firms.

The impact of this globalization of business on developing countries is the focus of this book. Who are the probable winners and losers? How are governments responding in terms of national policies and regional approaches, and how does it all translate in the signals they set for companies? Are there any winning strategies in the more competitive global economic environment of the 1990s? And how can the international community best support these strategies?

While the early signs of globalization warned of a marginalization of developing countries, this book shows that an increasing number of developing countries from all regions are actively participating in the globalization of production and markets. Their success suggests that there is much that countries can do to create or acquire the human competencies and physical capital necessary to benefit from the new globalism. For example, traditional sources of comparative advantage are important but erode over time, and must be accompanied with proactive policies that encourage improvements in infrastructure, skills, services, and the political and business environments. The book also points to the importance of encouraging networks among enterprises and regional integration. In short, governments should open up their economies but not assume that liberalization will automatically yield the benefits of globalization. Development policies matter.

The contributors are Yair Ahroni, Albert Bressand, John Cantwell, Daniel Chudnovsky, Seev Hirsch, Louka T. Katseli, Sanjaya Lall, Robert Z. Lawrence, Linda Lim, Nathaniel Siddall, and Stephen Thomsen.