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 Current location:2016 Conference - CA  
 
Special Workshop
 
Multinationals and Economic Development in Emerging Markets
 
Ottawa, Canada
June 3-5, 2016

1. Overview

Investments by emerging-market transnational corporations (TNCs) present many opportunities and challenges for economic development in Canada. This special workshop being held in Ottawa seeks to deepen research, analysis and discussion of those opportunities and challenges. It is to examine the role of TNCs in Canada, China and other emerging economies in their growing economic integration with other countries and economic development. The workshop will bring together the latest empirical evidence for better understanding of the impact of TNCs on capital formation and human capital development; innovation and technology; productivity and trade; and business and policy strategies.

Upon this workshop, we could contribute and distribute the knowledge about the economic, social and environmental effects of foreign investment by emerging-market TNCs.  We would also document the significant role of home-state and international institutions (i.e., formal laws, regulations, and policies, and informal mechanisms and relationships) in these fronts. Finally, we would explore the commonalities and differences between TNCs from developed countries and those based on emerging-markets in terms of their impacts on sustainable development in host countries and emerging market economies.  

This workshop will bring wide social benefits to Canada and emerging economies. The global economy is increasingly integrated as many of the world’s governments have embraced free trade and investment as the route to economic growth and the cost of international transport and communication has declined dramatically. To facilitate the integration, various bilateral or multilateral trade and investment agreements have been signed and implemented, resulting in substantial reduction in trade and investment barriers worldwide. As a result, foreign direct investment (FDI), exporting, and offshoring have become critical forces for economic and social development in many countries. This is especially true for Canada.

2. Objectives

Although the economic impact of TNCs has been researched extensively, the important objective for this workshop is to provide us with an opportunity, by using the latest industry and firm data, to conduct more in-depth and rigorous analysis of issues related to TNCs and their role in Canada, China and other emerging markets. For examples:

  • What is the impact of FDI on innovation and industrial sophistication in emerging economies? China, for instance, is targeting to align FDI with upgrading industrial sophistication and supporting innovation. However, there are little studies that examine whether FDI promotes innovation and accelerates technological progress.
  • What is the effect of FDI on the participation of emerging economies in global value chain and setting up of the sourcing industries? There has been a focus on setting up of the service sourcing industries in emerging markets. The workshop will be designed to look into the effect of FDI on service sourcing industries.

As a goal of the workshop, we have planned to invite eight to ten well-known experts from Canada, United States, China and other emerging markets to discuss the role of TNCs in the economic integration and economic growth of Canada, China and other emerging economies. Specific aspects include: multinationals and resource allocation; Multinationals and offshoring; Economic impact of FDI; Trade sophistication; FDI, trade and sustainable development; and Policy and institutional developments.

3. Why Important?

The knowledge created by this workshop is expected to provide theoretical discussions and empirical evidences for better understanding of the economic impact of multinationals and their associated business activities. This includes innovation, business strategy/organization, and interactions with institutions in Canada, China and other emerging economies. It is to promote and encourage follow-on studies and even investments by the proponent multinationals. When at the preparation stage for this workshop, the results of interviews with the proponents from Canada and emerging economies involved in spin-off products indicated that the project will generate significant follow-on studies. For example, about ten proponents from China indicated that this workshop might lead them to consider relevant projects and developments.

The results of the workshop will have important policy implications. In particular, it will be significant for the Canadian government in developing policies for promoting and facilitating inward FDI in Canada and Canadian businesses going abroad. The workshop will synthesize the current knowledge about TNCs and their important role in economic development in Canada and emerging economies. It will also identify the knowledge gaps associated with TNCs.  As part of the evaluation, the project team will continue to interview other organizations to identify the proponents as having undertaken spin-off products or developments related to this workshop. We expect that the follow-on activities will be varied widely, from developing further studies associated with TNCs, exploring new markets for Canadians, raising awareness of foreign investment in Canada and emerging markets, supporting business development and expansion, and building partnerships and networks.

Canada is a medium-sized open economy. Trade accounts for more than 60 per cent of its gross domestic products. One in every five jobs is directly linked to trade. Trade and FDI are strong complements because much of the trade is carried out by TNCs. FDI and TNCs are playing an increasingly important role in sustaining Canada's economic vitality and dynamism by positively impacting capital formation, human capital development, innovation and productivity. Between 1990 and 2014, Canada’s inward FDI stock increased from $130 billion to $732 billion. TNCs from emerging markets are a growing force in those developments. In 2013, outward FDI from developing and transition economies reached US$553 billion, amounting to 39% of global FDI outflows. Driven in particular by the resources and policies of the BRIC states, emerging-market TNCs are expected to increase their presence abroad.  In Canada, for example, Chinese capital has become an important source for its new investment, especially in the energy sector. By 2014, China’s FDI in Canada increased from almost zero in 1990 to more than $25 billion.

Because of the increasing importance of TNCs from emerging economies to economic growth in Canada, a better understanding of the performance, strategy, and behavior of TNCs in Canada and China and other emerging economies are essential for designing more effective industrial, commercial and business policies. We are targeting participants from Canadian Economics Association’s annual conference. The participants (approximately 80) would be mainly from faculties related to international business, management and economics. The workshop would also attract the international economic policy circle to join. In addition, we will approach for business and industrial practitioners. Moreover, we will greatly encourage senior Maters and Ph.D. students from the relevant fields to attend this special event.  

4. Proposed Themes

  • International trade and development: Given the importance of the international trade for Canadian economic development, we at Canada cannot abdicate the responsibility to learn from China as a key player and from other emerging markets in the global economy by working together on drawing significant lessons for international trade and development.
  • Global value chains and industrialization: To what extent, East Asia’s integration into global value chains (GVCs) has made the region more vulnerable to business cycle shocks in the West. This panel discussion will identify different channels through which business cycle shocks in the West can propagate to East Asian countries via GVCs.
  • BRICS in FDI and global economy: BRICS (Brazil, Russia, India, China and South Africa) are the five biggest emerging economies, as they account for two fifth of the total GDP of all emerging economies and their share in FDI inflow have been increasing year after year.
  • FDI, innovation and sustainable development: The rapid growth of FDI has already had a significant impact on the development of the world economy, especially for science and technology. Many developing countries had developed fast due to the assistances of the capital and knowledge that FDI brought in.
  • Policy implications for Canada and emerging markets: FDI can serve as an important complement to domestic investment and capacity building for the growth and development. The distinctive aspect of FDI is that it brings in a package of resources -- capital, technology, skills, management know-how, and marketing capabilities -- along with production activities, to a host economy, such as Canada, and the emerging markets.
  • Development theory and economics: Theoretical literature on offshoring has been mainly positive, focusing on the factors influencing firms’ choice of organizational structure and location of production.

5. Tentative Timelines

  • December 2015 – January, 2016: Survey and investigations of the Workshop and preparation of the application for the funding support;
  • February – March 2016: Further survey, investigation and preparation of the workshop;
  • April – May 2016: finally approaching and confirming the presenters.

6. Summary Remarks

In order to well-distribute and promote the knowledge from the workshop for knowledge connection and social benefits, the workshop team will work together with the journals, such as Canadian Public Policy. The team could also work with the Cambridge Scholars Publishing for publications related to the workshop when necessary. Meanwhile, if the fund is available, we would produce a video about the workshop with potential translations to other languages, partially in French and Chinese, as well as circulate to relevant media for promotions.   

For more information, please visit https://economics.ca/2016/en/ and/or write to us at tncr.special@gmail.com.

 

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