Multinational firms and the extractive sectors in the 21st century: Can they drive development?
Rajneesh Narula
#2017-041
Historically, extractive sector MNEs have been seen as an obstacle to
sustainable development, because they operated in enclaves with limited
local engagement. Import-substitution policies aimed to increase the
local benefits of these resources, restricting FDI. Since
liberalisation, extractive MNEs have re-engaged with developing
countries through looser governance structures with greater potential
for linkages. Despite the potential, few host countries have seen
meaningful MNE-led development because of weak domestic firms and poor
location advantages. New MNEs from emerging economies have not shown a
greater propensity to local linkages. Only countries that have continued
to invest in location advantages have seen substantial benefits.
Acknowledgements: I would like to thank Ana Botella of the University of
Valencia for her research assistance and comments on the various drafts.
I am also indebted to Grazia Santangelo, Daniel Shapiro, Elisa Giuliani
and Lou Anne Barclay for their insightful feedback.
Keywords: sustainable development, MNEs, linkages, emerging economies,
extractives, natural resources, infrastructure, enclaves.
JEL Classification: F23, F63, F54