Globalization of Innovation: The Role of Multinational Enterprises

Abstract

Economic globalization implies a growing interdependence of locations and economic units across countries and regions. Technological change and multinational enterprises (MNEs) are among the primary driving forces of this process. This article attempts to evaluate the changing extent and importance of MNEs as conduits for cross-border knowledge flows. MNEs affect the development and diffusion of innovations across national borders through a number of mechanisms, among which FDI (through which MNEs acquire existing assets abroad or set-up new wholly or majority owned activities in foreign markets) is only one. International knowledge flows also move through trade, licensing, cross-patenting activities, and international technological and scientific collaborations. These other modalities involve a wide variety of economic actors, but the MNE occupies a central role among these actors. This article emphasizes the MNE's multifaceted role in the more general process of the globalization of innovation.