| Abstract: | Conclusions Part IV of Parry's article discusses three types of FDI activity by MNEs; these are correctly analyzed and fully consistent
with my earlier work. All the three cases (vertical integration, transfer pricing and quality control) are examples of market
imperfections which lead to internalization. I am glad that Parry accepts these“three areas where internalization appears
to provide an explanation of FDI as a specific form of international involvement by the MNE” but I am surprized that he still
cannot accept the general point that these are examples of“market failure” in an international context, which lead to multinational
hierarchical activity. The focus of my survey article was to demonstrate that“established theories of FDI” tend to fasten
one to one or another of such market imperfections, but in all cases internalization results. Internalization as a general
theory of FDI is still a robust principle. It provides the conceptual foundation for analysis of the MNE and the field of
international business. |
