Book Review

PRAISE TO ALLAH ALMIGHTY

He is Allah, whom there is none worthy of worship except He, the All-Knower of the unseen and the seen (open). He is the Most Beneficent, the Most Merciful. He is Allah, whom there is none worthy of worship except He, the King, the Holy, the One Free from all imperfections, the Giver of security, the Watcher over His creatures, the All-Mighty, the Compeller, the Supreme. Exalted is He above all that they associate [in worship] with Him. He is Allah, the Creator, the Inventor of all things, and the Bestowed of forms. To Him belong the Best Names. All that is in the heavens and the earth glorify Him. And He is the All- Mighty, the All-Wise.

Prepared By: Nasir Zaman

Book Review

DEDICATION
This dissertation is dedicated to Allah Almighty, My beloved parents, and My respected teacher Prof. Dr. Karamat Ali who helped me to write this Review.

Prepared By: Nasir Zaman

Book Review

ACKNOWLEDGEMENT

I wish to acknowledge the assistance and support of who helped and supported me in the realization of this study. I am especially indebted to Prof. Dr. Karamat Ali, Class Instructor, for his expert guidance throughout this review. His intellectual insight, encouragement and patience have brought this Assignment to completion. His timely and insightful comments are highly appreciated. His comments, ideas and advice have influence on every page of this effort. Thanks to my parents also. Due to their prayers I am successful in completing this review. Thanks should also go to NUML University, Multan Campus who gave me an opportunity to carry out this effort. Last but not least, I would like to thank to my class mates for their help and support.

Review

Prepared By: Nasir Zaman

Book Review

The study of this book is very important regarding the heterogeneity in FDI and MNCs and the imperative of disaggregation. Large companies doing business on a global basis increasingly dominate the production and marketing of the world's goods and services. The importance of these companies continues to grow while the debate about their nature and effects remains the hot issue of every time. Stephen Cohens viewpoint in this book is to provide the accurate understanding of the nature and impact of these phenomena comes from acknowledging the dominance of heterogeneity, perceptions, and ambiguity. This approach should contribute significantly to both a better academic understanding and a more productive policy debate of an increasingly important element of the world economy. He presents an intelligent, non-judgmental and honest summary of both sides of some very complex arguments and assumes that readers are intelligent enough to draw their own conclusions. He repeatedly warns the reader making any broad statement against MNCs and FDI or on their effects. The questions including why firms become MNCs, why they choose the locations they do, and what effect they have on countries, Cohens answer is it depends because of the large heterogeneity at play. After studying this book, the students and teachers of international political economy and international business, and to all those interested in the economic and social challenges of globalization will be benefited by understanding the following different approaches extracted from the fifteen chapter of this book. The author explains how they are distinct from those studied in the usual approach to analyze multinational corporations (MNCs) and foreign direct investment (FDI), and why they can help to provide a more accurate, better understanding of these important phenomena in the global economy. The book gives the concept that different assessments of MNCs and FDI requires that MNCs be recognized as heterogeneous entities and FDI as a heterogeneous process. Disaggregation becomes an essential analytic tool in the absence of homogeneity. Most generalizations are inaccurate or distorted. Another basic thesis argues that these international business phenomena are more effects, than causes of change. Finally, the argument is made that even accurate evaluations of MNCs and FDI tend to have a short life-span because they are dynamic and constantly changing, not static, phenomena.

Prepared By: Nasir Zaman

Book Review

Given the book's pivotal argument that there is no one size fits all model of either MNCs or FDI, the next chapter presents a lengthy analysis and description of the many distinct forms that they take. The implications of the widespread failure of policymakers, the general public, and most scholars to recognize and appreciate heterogeneity are discussed, with specific reference to the resulting failure to differentiate between costs and benefits, high quality and low quality FDI and MNCs depending on which of the various forms and behavior patterns are assumed by an individual foreign subsidiary. The second and third sections of the chapter Heterogeneity consist of lengthy, value-free empirical profiles of the various forms of FDI and MNCs, respectively. In the chapter why companies invest overseas?, the writer beautifully explains the major academic models and theories as to why companies would accept the costs and risks of seeking to operate in foreign markets with alien cultures, often in direct competition with established local competitors. The most of the chapter is devoted to an extensive and unique list of realworld business and economic reasons that have caused FDI to be attractive to a growing number of companies in a growing number of countries. The concluding section is a case study of the automobile industry, a sector that can be used to illustrate a large number of the reasons for doing business on a multinational basis as previously discussed. Because not even the largest MNC can afford to invest in every country, an important phase of the FDI cycle is the process by which a country chooses where to establish its foreign subsidiaries. The heterogeneity of business strategies and objectives means that no single guideline exists for manufacturing and services companies when selecting appropriate overseas sites. This concept begins in the book with a statistical breakdown showing the asymmetrical geographical distribution of MNCs, with emphasis on their concentration in industrial countries. Next, the various positive factors that attract MNCs to certain countries, including financial incentives, are examined in detail. Another important issue discussed by the author regarding FDI and MNCs is their impact on relatively less developed countries (LDCs). The chapter effects of FDI on less developed countries, makes no effort to prove net harm or benefits to LDCs. Instead, the thesis developed

Prepared By: Nasir Zaman

Book Review

here is that it is impossible to determine scientifically that all MNCs are collectively harmful or beneficial to all LDCs on a permanent basis.. A fourth section focuses on the difficulty in determining whether pre-existing economic conditions in a developing country determine the effects of incoming FDI, or whether FDI itself determines economic progress. The final section makes the case that the preferred answer to the question of the impact of MNCs and FDI on economic development is that it is indeterminate. One of the less contentious issues surrounding MNCs is their significant and still increasing impact on international trade flows and policy. This trend is the result of increasing reliance by large manufacturing companies on FDI as an alternative to exporting to sell their goods and services to customers in other countries. The author surveys the data demonstrating the extent to which FDI has displaced exports as a marketing vehicle and altered the product composition of many countries' exports and imports. It presents several country case studies to provide more specific and detailed insight into changing national trade patterns. The other two topics discussed at length are the questions first, of the likely extent that the proliferation of FDI has decreased national exports and jobs, and second, of the extent to which FDI proliferation has rendered After describing the major themes and arguments of this book, the author seeks to make a convincing case for an innovative method of analyzing and evaluating MNCs and FDI, a method that is different from the traditional approach towards MNCS and FDI. Emphasis is on the heterogeneity and it depends concepts, the main sections of the last portion of the book argue that the generalized question about MNCs and FDI needs to be restated to produce more accurate answers. He urge a greater recognition of the limits and frequent ambiguity of the data, and criticize the used methodology of selecting a limited number of anecdotes to support preconceived conclusions. A concluding section offers specific criticism of the decades-long, inconclusive public debate over the impact of multinational enterprises, e.g., its failure to recognize that the impact of a newly established foreign subsidiary will reflect where it falls on the continuum between high and low quality investment, and the importance of pre-existing value judgments in influencing the findings of anyone writing on MNCs and FDI. The more accurate and relevant assessment of MNCs and FDI offered in this book aim to play a role in reconciling the irreconcilable black-and-white positions on their positive or
Prepared By: Nasir Zaman

Book Review

negative effects. This book builds on the thesis that these phenomena are heterogeneous, and therefore critical assessments must be disaggregated according to circumstances. The recommendations presented here for future academic study and policy debates center on the desirability of recognizing the diversity of the subject in general and the spectrum of very high quality inward FDI to very low quality, emphasizing the inclusiveness of actors playing a role in the regulation of MNCs, and acknowledging the legitimate complaints against international business operations articulated by critics of globalization. This book finally argues that a different route to understanding is needed and overdue: acknowledge the diversity and heterogeneity of phenomena that are lumped under very broad spectrum. MNCs are different by nature and therefore different in their respective mix of costs and benefits and one should observe them accordingly.

Prepared By: Nasir Zaman