Articles

Book provides guide for foreign direct investment in Latin America

November 18, 2009

Even though off-shoring is controversial in the United States, foreign direct investment is unavoidable for multinational companies that want to survive in today’s global economy. But when making decisions about where to locate such investments — with millions or even billions of dollars at stake — how do executives at companies such as Intel and Dell choose one country over another? What do the governments in the host countries want from these companies, and what sorts of negotiations take place behind the scenes?

Thunderbird School of Global Management Professor Roy Nelson, Ph.D., answers these questions in his new book, “Harnessing Globalization: The Promotion of Nontraditional Foreign Direct Investment in Latin America” (Pennsylvania State University Press, 2009). The book draws upon Nelson’s research in Brazil, Chile, Costa Rica, Mexico, Ireland and Singapore to reveal ways that countries can attract nontraditional forms of foreign direct investment to promote their own development. The book also explains why some companies do better than others at dealing with these governments.

“Based on extensive firsthand field research, this book takes the reader into the minds of corporate executives involved in this process in a way no book has done before,” Nelson said. “International managers will learn how to conduct an effective site selection process and how to deal more effectively with host country governments. For their part, government officials will learn what strategies are most effective at attracting and harnessing nontraditional foreign direct investment.”
The body of the book consists of in-depth case studies of companies involved in the site selection process. One chapter explains why Intel bypassed Brazil, Chile and Mexico to select the much smaller Costa Rica as the location for its only manufacturing plant in Latin America. The chapter also explains how Intel’s investment has turned Costa Rica into a haven for high technology investment.
Another chapter explains the obstacles Dell encountered in negotiating with the governor of Brazil’s southernmost state, Rio Grande do Sul, and the creative solution Dell’s executives found for the problem — one that could work in many other contexts.
Nelson’s industry experience includes working for Pharmacia & Upjohn (later acquired by Pfizer) in
Brazil. He also lived in Brazil while conducting research for his dissertation on the Brazilian computer and pharmaceutical industries. Other field research projects have taken Nelson to Chile, Peru, Mexico, Honduras, Belize, Argentina, Venezuela, Singapore, Ireland and Malaysia. He has served as a consultant to the World Bank and to the Chilean government on its effort to attract high technology foreign direct investment.

In addition to Harnessing Globalization, Nelson’s publications include Industrialization and Political Affinity: Industrial Policy in Brazil (Routledge Press, 1995). He also has published numerous articles and case studies. Harnessing Globalization is available on Amazon.com.