Multinational enterprises and structural transformation in emerging and developing countries: A survey of the literature

Abstract

This paper presents a review of the literature concerning the relationship between multinational enterprises (MNEs) and structural transformation in emerging and developing countries based on journal publications over the 2000 to 2020 period. Both outward and inward foreign direct investment by multinationals were found to have strong potential implications for structural change, in the form of knowledge transfer and capabilities upgrading, productivity growth, export promotion, industrial diversification and service sector growth. With rapid development and diffusion of digital technologies, MNEs in the service sector and the digital economy may also open windows of opportunity for developing countries to catch-up in the service sector. The strength and sign of these effects were, however, dependent most prominently on (1) the characteristics of the MNEs and the host countries and (2) the compatibility of the MNEs and the host country. Policy and managerial implications are discussed. A set of areas for future research are also identified.