ABSTRACT
In a given host-country environment, are the affiliates of multinational enterprises (MNEs) more export-oriented than the wholly domestically controlled firm? In recent years this issue has acquired a further dimension with the development of the so-called third-world multinational enterprises (TWMNEs) whose industrial performance differs in important respects from the developed country MNEs (DCMNEs). Given the desire of many developing countries to achieve rapid economic growth through the promotion of manufactured exports, this has become a subject of much policy interest with implications for policies towards foreign direct investment (FDI). It has also generated considerable academic debate.2 However, no clear conclusions emerge from the relatively small number of empirical studies on this issue. Further, even these studies suffer from important methodological flaws in their statistical analysis. In this chapter we draw attention to some of the key methodological flaws of the earlier studies, present a more appropriate econometric procedure and provide new empirical evidence on the issue based on an analysis of data from Sri Lanka. Further, to our knowledge, for the first time in the literature, a distinction is drawn between DCMNEs and TWMNEs in the analysis of export orientation.
