Multinationals and industrial policy

Giorgio Barba Navaretti, Anthony J. Venables

Research output: Contribution to journalArticleResearchpeer-review

6 Citations (Scopus)

Abstract

Are there benefits to the host country from multinational investments? Does potential value from these investments make active industrial policy worthwhile? We answer the first question affirmatively, having reviewed economic principles and evidence concerning the effects of projects locating in (or not being off-shored from) a country. On the second, policy can have a limited effect in influencing location decisions, but it is doubtful that it is cost effective. Implementation faces lack of information, risk of capture, and, in many cases, non-rigorous processes. Competition between jurisdictions means that much policy is investment diversion not investment creation. There is a case for supra-national controls (as with EU State Aid regulations), for policy to be used only for well-defined market failures, and for better implementation and more rigorous ex ante appraisal and ex post evaluation.

Original languageEnglish
Pages (from-to)361-382
Number of pages22
JournalOxford Review of Economic Policy
Volume29
Issue number2
DOIs
Publication statusPublished - Dec 2013
Externally publishedYes

Keywords

  • Multinational corporations, Industrial policy

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