PARENTAGE AND FACTOR PROPORTIONS: A COMPARATIVE STUDY OF THIRD‐WORLD MULTINATIONALS IN SRI LANKAN MANUFACTURING*
| Date | 01 November 1988 |
| Published date | 01 November 1988 |
| DOI | http://doi.org/10.1111/j.1468-0084.1988.mp50004004.x |
| Author | Premachandra Athukorala,S. K. Jayasuriya |
OXFORD BULLETIN OF ECONOMICS AND STATISTICS, 50,4(1988)
0305-9049 S3.00
PARENTAGE AND FACTOR PROPORTIONS: A
COMPARATIVE STUDY OF THIRD-WORLD
MULTINATIONALS IN SRI LANKAN
MANUFACTURING*
Premachandra Athukorala and S. K. Jayasuriya
I. INTRODUCTION
A striking development in the scenario of internationalization of economic
activity that dates largely from about the late 1960's is the emergence of
multinational enterprises1 from developing countries. As an outcome of
rapid industrial development in the post-war era, the more industrialized of
the developing countries now provide home to many indigenous firms which
have grown in strength to expand production beyond national frontiers,
mostly (but not exclusively) to neighbouring developing countries. These
'new' multinationals or Third World multinational enterprises (TWMNEs as
they are popularly known), still account for only a minor share of the total
stock of direct foreign investment in developing countries,2 but in a sig-
nificant number of them the incidence of such investment is already quite
substantial (UNCTC, 1983:19). There is evidence that the number of
TWMNEs, the sophistication of their activities and their international spread
has greatly increased over the years (Lall, 1983).
Beginning with the pioneering works of Diaz-Alejandro (1977), Wells
(1977) and Lecraw (1977), a sizeable body of literature, mostly exploratory
in nature, has developed on this subject.3 A basic assertion of this literature is
that TWMNEs possess a number of unique characteristics which distinguish
them from the 'traditional' (developed-country) multinationals (DCMNEs).
One such hypothesized difference relates to the relative appropriateness of
their technology to host developing countries. A well known argument in the
long-running discussion on labour absorption in the manufacturing sector of
*The authors wish to thank the School of Economics, La Trobe University, for financial
support and Ravi Ratnayake for excellent research assistance.
In line with usual practice in this area of study, the multinational enterprise (MNE) is
defined here as an enterprise that owns or controls income-generating assets in one or more
countries other than the one in which it is based.
21980 the share of developing-country investors in the total stock of direct foreign invest-
ment in developing countries was between 4to 8 percent (Jenkins, 1986; 458).
Lall (1984) and Wells (1983) synthesize much of the existing knowledge.
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