The diverse colours of money: the country-of-origin effects of foreign direct investment within East Asia

Abstract

In the existing literature on foreign direct investment, it is often assumed that multinational corporations and their direct investments reduce institutional differences among economies. Building upon this assumption, those influenced by management studies and mainstream economics see multinational corporations as an agent that upgrades local business conventions to global standards. Geographers do not usually accept this convergence theory and claim differences among host economies prevents convergence in business practices. The difference between these groups of scholars is that the non-convergence camp acknowledges the resilience of local business practices while the convergence camp does not. The papers comprising this special issue question this shared assumption of foreign direct investment as a cause of convergence. As outlined in this introductory paper, and explored in detail in the following papers, we pay attention to the simple fact that the foreign direct investment is from a company or individual whose business practices are inherently influenced by their experiences of business in the nation or region of origin, and these experiences indelibly influence, to varying degrees, their local operations in investment destination. Once we accept such an obvious fact, recent debates on variety of capitalism and related literatures on the developmental state, welfare regime and other concepts all become relevant to understanding of the local operation of foreign-owned businesses.