Business History and the Impact of MNEs on Host Economies

Business history has long been recognized as providing an important dimension in international business studies. Much of this historical work has focused on mapping historical growth patterns of multinationals and exploring the determinants of their growth. However, there is also growing literature on the long-term impact of multinational investment in host economies, and this chapter reviews this research. The focus is primarily on developing country host economies and more broadly on the global distribution of wealth and poverty. This chapter suggests three major arguments. First, it is necessary to take a long-time horizon when assessing impact on host economies. Second, it is necessary to incorporate societal and cultural impacts alongside more traditional measures of economic impact. Third, there is weak historical evidence that multinationals have had a substantial positive impact over the long run on the development of host developing countries. A hypothesis is suggested that, given adequate domestic growth-supporting institutions and human capital development, developing countries achieve more sustained development from excluding foreign-owned multinationals rather than hosting them.