Introduction

In this chapter, the analysis moves from the area of foreign trade to that of foreign direct investment (FDI). The purpose of the chapter is to discuss the ways in which the operations of multinational enterprises may have influenced the structure and organisation of national systems of innovation first during the previous, now ‘classical’ period of MNE expansion (1955–1975) and how they may be impacting on these systems today within the new phase, often referred to as ‘globalisation’, which began in the course of the 1980's.

The analytical approach adopted is historical. The underlying hypothesis is that as a result of capital accumulation, income growth and technological change, the substantive dimensions and the organisational forms of international production and the other operations of MNEs undergo over time significant and at some moments qualitative changes.

Along with some other factors, the same processes which offer new, enlarged opportunities for MNEs will have impacts on the economies and social institutions largo sensu of nation states. The level of inward and outward foreign direct investment (FDI) as well as the forms investment take and more generally the changes occurring in the operations of MNEs, represent one broad avenue through which such impacts occur.