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the last twenty years, a new twist has been added to this theoretical insight after observing that the new MNEs are making acquisitions and increasing their presence in the infrastructure industries of the rich countries of Europe and North America, including electricity generation and distribution, telecommunications, water, and airport, ports, and toll-highway operation, among others (Guillén 2005). The recent corporate expansion into Latin America of Spanish firms from regulated industries illustrate how firms tend to invest in those countries where their political capabilities are more valuable, i.e. those with high political instability, as shown by García-Canal and Guillén (2008). An interesting result of this study is that Spanish firms from regulated industries reduced over time their propensity to invest in politically unstable countries, showing that it is easier to move from politically unstable countries to stable ones than the other way around.

Patterns of Expansion

An important point that early students of the new MNEs underplayed was that, depending on the home country, these foreign-investing firms tended to emerge from certain industries and not others (UNCTAD 2006). Thus, the South Korean MNEs have excelled in automobiles and electronics, the Taiwanese in component manufacturing, the Brazilian in automotive and aerospace products, the Mexican in ethnic brands and in producer goods such as cement, the Spanish in regulated and infrastructure industries, the Indian in information services, and the Chinese (so far) in simple assembled goods, and so on. In so doing, firms originating from developing, newly industrialized, and upper-middle-income countries have accumulated proprietary intangible assets that have enabled them to successfully compete through internalized exports and horizontal investments even in the most advanced countries in the world.

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