A Perspective from the MNE Declaration to the Present: Mistakes, Surprises, and Newly Important Policy Implications - Working Paper No.11

The paper is particularly relevant for the current debate about the use of performance requirements to maximize the benefits of MNEs for host countries. There are two contrasting approaches in this regard: one that argues in favour of using performance requirements (such as local content and technology requirements) to encourage the development of backward linkages and the transfer of skills and technology, and another that argues in favour of leaving MNEs quite free to design their competitive strategy, while putting appropriate accompanying policies in place. The author argues that in a number of industries the latter seems to be a superior method of maximizing the benefits in terms of technology transfer, skills upgrading and developing local suppliers. The author adopts a position on these issues but leaves the reader much enlightened along the way based on a review of the vast literature and evidence on the subject. There is also a valuable section at the end with recommendations for future research on questions related to how foreign direct investment can be used to generate decent work the developing world.