Exploring the Link between Foreign Direct Investment and Multinational Enterprises for Developing Innovative Competitive Strategies in India

Abstract

Multinational enterprises exist because they hold certain competitive advantages over their local counterparts and affect local economies through their spillover effects. Globalization of economic activities has increased the importance of multinational enterprises in the development process of a country. The inflow of Foreign Direct Investment (FDI) increased rapidly during the late 1980s and the 1990s in almost every region of the world revitalizing a contentious debate about the costs and benefits of FDI inflows. The attraction of foreign direct investment (FDI) constitutes a fundamental element to support strategies that aim to achieve sustained economic growth in developing countries. This is because globalization and the attendant opening of the economies to competition require increased financial resources and technology. The paper also opens a new avenue for the researchers by pointing towards a potential connection between FDI and competitive advantages of MNEs.

Keywords: Multinational Enterprises (MNEs), Developing economies, Competitive advantages, FDI, Financial development, Economic growth, Sustainable Development, Spillover effect.