Think Piece

Multinationals and Foreign Investment Policies in a Digital World

January 2016

The purpose of this paper is to discuss the future of the multinational enterprise (MNE) and implications for the international investment regime. The paper begins by summarising current thinking on multinationals and their motivations for foreign direct investment (FDI). It argues that two “winds of change” – emerging market multinationals and the digital economy – are shattering the traditional view of MNEs and FDI. The greater importance of family and state ownership in emerging market MNEs affects their motivations for FDI and location decisions. At the same time, the digital economy opens the global economy to born global firms and micro-multinationals, particularly in home countries with excellent ICT infrastructure. Existing public policies, therefore, need to take account of the greater heterogeneity and different needs of MNEs from emerging markets in the digital economy that lies on our doorstep.

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