FDI in the Digital Economy: A Shift to Asset-Light International Footprints

Casella, B. and Formenti, L. (2018). FDI in the digital economy: a shift to asset-light international footprints. Transnational corporations, 25(1):101–130.

31 Pages Posted: 23 May 2019

See all articles by Bruno Casella

Bruno Casella

United Nations - Conference on Trade and Development (UNCTAD)

Lorenzo Formenti

affiliation not provided to SSRN

Date Written: April 17, 2019

Abstract

The digital economy is becoming an ever more important part of the world economy. It is revolutionizing the way we do business, and it has important implications for foreign direct investment (FDI). However, little systematic analysis has been done to investigate the investment patterns of digital multinational enterprises (MNEs). This study, conducted in the context of UNCTAD's World Investment Report 2017 (WIR17), is an attempt to fill some of the gap in knowledge and to provide an impetus for future research. It proposes a new interpretative framework for the digital economy, builds an extensive sample of digital and ICT MNEs, and profiles their international operations. Its main findings are that MNEs in highly digitalized industries have a “lighter” FDI footprint than traditional MNEs; they tend to concentrate their operations in a few highly developed countries and their investment patterns are shaped by fiscal and financial motives more than those of traditional MNEs. As digital technologies and business models tend to disseminate across the broader economy, this may suggest the onset of a new era of international production and MNE internationalization paths. This paper sheds light on the methodology underpinning the analysis in WIR17 to ensure full replicability and to prepare the ground for further work in the area. It also builds further on the discussion in WIR17, proposing broader implications for international business and new avenues for future research.

Keywords: FDI, digital economy, multinational enterprises, ICT

JEL Classification: L86, M21, P45

Suggested Citation

Casella, Bruno and Formenti, Lorenzo, FDI in the Digital Economy: A Shift to Asset-Light International Footprints (April 17, 2019). Casella, B. and Formenti, L. (2018). FDI in the digital economy: a shift to asset-light international footprints. Transnational corporations, 25(1):101–130. , Available at SSRN: https://ssrn.com/abstract=3373815

Bruno Casella (Contact Author)

United Nations - Conference on Trade and Development (UNCTAD) ( email )

Palais des Nations
Office E 8074
Geneva, 1211
Switzerland

Lorenzo Formenti

affiliation not provided to SSRN

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