Spillover Effect Caused by the MNEs on the Host States

Abstract

Being a prominent promoter in the process of economic globalization, the MNEs help promote the development of the economy both in the parent country and the host states by acting as an indispensable market subject. The MNEs root the host states' or even the global market, relying on the advanced technology of the parent country-usually developed country. During the process, the companies focus on training not only relevant but also extraordinary employees and promote the proportion of exporting and renewing the structure of manufacturing, establishing maker factories directly in the host states, thus accelerating the process of the spillover effect invisibly. From this perspective, the technology spillover effect seems to bring a win-win result. But it is worth noticing that the technology which can be transferred to the host states or provided by the MNEs is limited both in quality and quantity. Furthermore, the economic spillover effect may also cause the capital crowding out from the host states' market, the suppression of the national enterprises, and the formation of monopolies are also worth studying. However, the current researches on the spillover effect mainly are about solving the practical problems, and the general plus comprehensive study is in deficiency. Therefore, this study focuses on the different aspects that the spillover effect can impose on the host states. Finally, it finds out that the spillover effect can operate in both negative and positive manners, which provides a groundbreaking perspective to deeply discover the MNEs and the spillover effect.