Some macro-data on the regionalisation/globalisation debate: a comment on the Rugman/Verbeke analysis
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Some macro-data on the regionalisation/ globalisation debate: a comment on the Rugman/Verbeke analysis John H Dunning1, Masataka Fujita2 and Nevena Yakova3 1 Reading University Business School, Reading, UK; 2Investment Trends Section, United Nations Conference on Trade and Development, Geneva, Switzerland; 3Rutgers University, New Jersey, USA
Correspondence: JH Dunning, Reading University Business School, Whiteknights, Reading RG6 6AA, UK. E-mail: [email protected]
Abstract This paper critiques an earlier contribution by Rugman and Verbeke (2004); and it does so by considering the global distribution of foreign direct investment (FDI). It also adds several new dimensions to the regionalisation/ globalisation debate, noticeably by (i) the incorporation of inward multinational enterprise (MNE) activity, (ii) evaluating changes in the geography of FDI between 1990 and 2003, and (iii) the introduction of the concept of revealed investment comparative advantage (RICA) of countries and regions. While broadly supporting the findings of Rugman and Verbeke, our paper shows that much of the explanation for the regional concentration of FDI and MNE activity reflects that of the gross domestic product (GDP) and trade of the countries concerned, rather than any distinctive strategy on the part of investing firms. Journal of International Business Studies (2007) 38, 177–199. doi:10.1057/palgrave.jibs.8400241 Keywords: Rugman and Verbeke; FDI; regionalization and globalization
Received: 22 April 2005 Revised: 7 February 2006 Accepted: 14 April 2006 Online publication date: 7 December 2006
Introduction In a perceptive and important contribution to our understanding about the geographical distribution of the sales (by destination) of the world’s largest companies, Rugman and Verbeke (2004) have uncovered some interesting facts. These facts they have used to argue the case that the sales of the great majority of the largest firms in the world (as identified by them)1 are concentrated either in the region in which their head offices are located, or in that of one other region. Indeed, they found that in 2001, 321, or 84%, of the firms identified were mainly home region oriented, and another 25, or 5%, were bi-regional (i.e., they operated in two of the three regions considered by the authors).2 In their opinion, only nine of the 380 firms could be considered genuinely global.3 In the introduction to their paper, Rugman and Verbeke state that most previous research on the geographical distribution of activity by multinational enterprises (MNEs) had used macro-level information on the stocks and flows of foreign direct investment (FDI). These, they contend (and rightly so), need to be supplemented by sales and other data supplied by individual MNEs. Part of their rationale for this contention rested on the imperfect quality, inconsistency, or inappropriateness or some of the macro-
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