Multinational Firms in the World Economy

Depending on one's point of view, multinational enterprises are either the heroes or the villains of the globalized economy. Governments compete fiercely for foreign direct investment by such companies, but complain when firms go global and move their activities elsewhere. Multinationals are seen by some as threats to national identities and wealth and are accused of riding roughshod over national laws and of exploiting cheap labor. However, the debate on these companies and foreign direct investment is rarely grounded on sound economic arguments.
 This book brings clarity to the debate. With the contribution of other leading experts, Giorgio Barba Navaretti and Anthony Venables assess the determinants of multinationals' actions, investigating why their activity has expanded so rapidly, and why some countries have seen more such activity than others. They analyze their effects on countries that are recipients of inward investments, and on those countries that see multinational firms moving jobs abroad. The arguments are made using modern advances in economic analysis, a case study, and by drawing on the extensive empirical literature that assesses the determinants and consequences of activity by multinationals. The treatment is rigorous, yet accessible to all readers with a background in economics, whether students or professionals. Drawing out policy implications, the authors conclude that multinational enterprises are generally a force for the promotion of prosperity in the world economy.

Business & Money

Navaretti, Giorgio Barba

Venables, Anthony J.

Economics

Princeton University Press

Cities in Sub-Saharan Africa are experiencing rapid population growth. Yet their economic growth has not kept pace. Why? One factor might be low capital investment, due in part to Africa’s relative poverty: Other regions have reached similar stages of urbanization at higher per capita GDP. This study, however, identifies a deeper reason: African cities are closed to the world. Compared with other developing cities, cities in Africa produce few goods and services for trade on regional and international marketsTo grow economically as they are growing in size, Africa’s cities must open their doors to the world. They need to specialize in manufacturing, along with other regionally and globally tradable goods and services. And to attract global investment in tradables production, cities must develop scale economies, which are associated with successful urban economic development in other regions.Such scale economies can arise in Africa, and they will―if city and country leaders make concerted efforts to bring agglomeration effects to urban areas. Today, potential urban investors and entrepreneurs look at Africa and see crowded, disconnected, and costly cities. Such cities inspire low expectations for the scale of urban production and for returns on invested capital. How can these cities become economically dense―not merely crowded? How can they acquire efficient connections? And how can they draw firms and skilled workers with a more affordable, livable urban environment?From a policy standpoint, the answer must be to address the structural problems affecting African cities. Foremost among these problems are institutional and regulatory constraints that misallocate land and labor, fragment physical development, and limit productivity. As long as African cities lack functioning land markets and regulations and early, coordinated infrastructure investments, they will remain local cities: closed to regional and global markets, trapped into producing only locally traded goods and services, and limited in their economic growth.

Africa's Cities: Opening Doors to the World

Henderson, J. Vernon

Lall, Somik Vinay

World Bank Publications

Urbanization is one of the most important drivers of economic and social development. The fact that almost 35 million Bangladeshis will become urban dwellers over the next two decades is excellent news. However, the urbanization process of Bangladesh is now at a crossroads, as it will be much harder for the country to reach upper-middle income status if its cities -- and Dhaka in particular -- do not embark on a new urban development paradigm before the compounded costs of urban congestion and infrastructure retrofitting stall the country’s economic and social development. However, Dhaka also has a unique opportunity. Towards its east, there is a vast expanse of land. Most of it is within five kilometers of the most valuable parts of the city but remains mainly rural. Here it is the experience of Shanghai that becomes highly relevant. Much of Shanghai recent success was due to China's strategic approach to the development of East Shanghai (Pudong). This study, as a joint effort by Bangladeshi experts, the University of Oxford, and the World Bank, tries to answer what would be a Pudong-like approach entail in Dhaka's case. By using state-of-the-art modeling techniques, this study simulates population, housing, economic activity, commuting times, transport and trade across the 266 unions that constitute Great Dhaka, taking into account flood vulnerability, traffic congestion and other location conditions. It does so under various scenarios for the development of East Dhaka, but always assessing the implications for the city as a whole. The simulations suggest a strategic approach to the development of East Dhaka, similar in spirit to the development of Pudong, would make Greater Dhaka a much more productive and livable city. And with East Dhaka being the hinge of Bangladesh's emerging north-south and east-west corridors, this greater prosperity is likely to spread. But the opportunity would be to a large extent missed if East Dhaka developed spontaneously, in the same messy way as West Dhaka did after the construction of the western embankment.

Toward Great Dhaka: A New Urban Development Paradigm Eastward (Directions in Development - Countries and Regions)

Bird, Julia

Li, Yue

Rahman, Hossain Zillur

Rama, Martin

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