“Such factors are considered to be a primary determinant of why transnational corporations, once having decided to invest abroad, will invest in one host country as opposed to another.”
“A geographically-based pattern of foreign direct investment WOULD NOT BE EXPECTED TO OCCUR, since the type of foreign direct investment that transnational corporations wish to undertake, rather than a corporation’s country of origin, should determine the relevant location advantages of a host country”…Thus, “no single Triad member would be expected to emerge as the dominant investor in a particular host country”.
“However, other factors may play a role in the distribution of worldwide investment flows, which might lead to the concentration of foreign direct investment by a single Triad member in a given host country. These include cultural, historical, commercial and political links between home and host countries”. (UNCTAD, World Investment Report,1991)
Therefore, clusters could be utilized, as in colonial times, to protect the trade of one colonial power against the encroachment of other colonial powers in the “former’s territory”.
UNCTAD comments: “the formation of a regional free-trade area with one of the Triad members at its core could, hypothetically, also lead to a pattern in which foreign direct investment from the Triad member would predominate in other countries within its free-trade area. This might occur if the regional integration programme, as designed by its members,incorporates measures that discriminate against firms from outsidethe region. For example, investment incentives for firms from the regiononly; local content levels set at a regional level; and publicprocurement markets that are closed to firms from outside the regionare all examples of measures associated with regional integration thatwould favour member-State firms at the expense of extraregional ones”.(Ibid.)
Empirical data for the last 10 years or so point to the formation of the above kind of regional integration, bringing back to the “globalized” world the pattern of “spheres of influence” so familiar to colonial times during XV-mid XX Century, when Western European powers, United States and Japan had their geographically defined hunting grounds for colonial trade.
Bibliography
Included above