Globalization, foreign direct investment and innovation

Abstract

This book starts from the premise that foreign direct investment (FDI) is one of the most important mechanisms underlying what is generally known as globalization. Alongside financial deregulation and liberalization, it has been one of the factors that has changed the way countries integrate into the international or more precisely the world economy, modifying the scope of government policies in the area of trade and competitiveness along with the array of instruments at their disposal. The important impact of FDI must be taken into account in order to gain a correct understanding of the dynamics of investment, trade and growth, the changes in the process of competition, the accumulation of technological knowledge, the patterns of convergence and divergence observed both between and within countries, and the institutional structure that leads to more employment and social cohesion. The presence of an increasing number of large transnational corporations (TNCs) that operate on a global scale has become so pervasive that their operations reach, directly or indirectly, almost every aspect of economic activity.