Bhaumik, S.K. orcid.org/0000-0002-4459-3659, Driffield, N., Estrin, S. et al. (1 more author) (2025) Geopolitical alignment, outside options, and inward FDI: an integrated framework and policy pathways. Journal of International Business Policy. ISSN 2522-0691
Abstract
This paper examines the interplay of geopolitics, multinational enterprise (MNE) strategies, and host-country policies in shaping foreign direct investment (FDI) flows. We move beyond the traditional focus on MNE decisions by incorporating insights from international relations theory to analyze how geopolitical alignment influences MNE global strategies and host-country policy responses. We develop a framework that considers three main dimensions related to home and host countries: their political alignment, which affects their respective availability of outside options, and the technology gap between them and the political system in the host country. On this basis, we explore the dynamic interplay between international geopolitical agendas, MNE investment strategies, and local investment promotion agency (IPA) policy choices. Our analysis shows that while home–host geopolitical alignment can facilitate FDI and simplify policy choices, particularly in democracies, the absence of alignment necessitates a more nuanced IPA response. Our research indicates that IPA policies must consider geopolitical alignment, benefits distribution across various stakeholders, and the need to foster embeddedness and long-term engagement.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © The Author(s) 2025. Open Access: This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/. |
Keywords: | International politics; Investment policies; Technological capabilities; Political alignment |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 28 Feb 2025 17:02 |
Last Modified: | 23 Apr 2025 10:58 |
Status: | Published online |
Publisher: | Palgrave Macmillan |
Refereed: | Yes |
Identification Number: | 10.1057/s42214-025-00212-y |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:223540 |