Multinationals as an Instrument of Catch-up Industrialization: Understanding the Strategic Links between State and Industry in Emerging Markets

Abstract

Emerging-market multinational corporations (MNCs) rise from rapidly catching-up economies, not from any so-called emerging ones. Their appearance on the world stage is concomitant with their success in initiating and sustaining industrial modernization in their home countries. And a successful catch-up can be planned, promoted, and achieved by a proactive government in an emerging economy that has a strong national determination for economic development. Market forces alone are not enough to spark an industrial takeoff. State involvement is practically a necessity, since market failures and externalities (notably negative ones) are rampant, both prior to, and in the early stages of, industrialization.