A co-evolutionary approach to MNE-assisted industry development: Uruguay’s forest-based pulp sector

Abstract

Purpose This study aims to investigate how co-evolutionary interactions between multinational enterprises (MNEs) and local actors shaped resource-intensive industry development over several decades, examining the economic, industrial and social implications of these interactions. It details the long-term effects of MNEs’ activities on the host country’s economic and social development and unfolds the path-dependent sequence and mechanisms of occurrence. Design/methodology/approach In a historical case study of Uruguay’s forest-based pulp sector during the 1970s to 2023, the authors analyze data from interviews with local industry actors and from company archives, academic publications and public environmental organizations. Findings The findings untangle the path-dependent co-evolution between MNEs’ activities and local actors and the resulting gradual development of the local industry. The increasing commitment of MNEs to the host country and their engagement with business and social communities impact the development of the industry’s technology basis, activity networks, identity and market. Spillovers and linkages occur in these interactions, driving industry development processes forward. The authors also reveal how MNEs attempt to address the social and environmental tensions associated with their operations to support their long-term presence in the host country. Research limitations/implications The authors contribute to the MNE-assisted development literature by untangling the specific mechanisms of MNEs’ engagement in local industry development over a long-term period and elaborating on its industrial and social implications. The authors enhance knowledge about spillovers by capturing a wide range of spillover and linkage effects and assessing their long-term impacts on industry development. Practical implications The authors offer insights into how policymakers can tailor instruments for attracting MNEs by adopting a long-term perspective regarding the implications for local development and accounting for economic, industrial and social impacts. This approach can maximize beneficial outcomes from MNEs’ presence and limit tensions between MNEs and local actors. Social implications This historical case study illustrates the complexity of MNEs’ engagement with local actors over time, including various tensions and positive developments. It illustrates the importance of social acceptance in achieving quality linkages between local and foreign actors. Originality/value This historical analysis untangles the path dependency in the long-term impacts of MNE-assisted development, illustrating the value of a temporal perspective.