A Framework Model on MNE’s impact on global development challenges in emerging markets

Final Report Summary - MNEMERGE (A Framework Model on MNE’s impact on global development challenges in emerging markets)

Executive Summary:
MNEmerge - “A Framework Model on MNE’s Impact on Global Development Challenges” aims to provide a comprehensive framework for understanding the impact of multinational enterprises (MNEs) on United Nations Millennium Development Goals (MDGs) and successive Sustainable Development Goals (SDGs) in developing countries using case studies, quantitative data as well as policy analysis. MNEmerge is a three year project which kicked-off in January 2014. The consortium assembled for this project has been an active contributor to the research on MNEs already before the project and it brought extensive expertise on studying societal problems in emerging markets.
MNEs promote local economic development through their foreign direct investment (FDI). From other side policy makers also aim to attract FDI to their home countries as they see FDI as important driver for national economy. However, the impact of MNEs on economic and social development of the host country could also be negative. This controversy has motivated the research on FDI’s role in economic and market evolution in developing countries. The specific focus in analyzing of FDI’s impact have been placed on linkages with local organizations. The formation of linkages between FDIs and local players is considered as the main mechanism by which multinationals can create environment benefiting a host country’s socio-economic development.
The project therefore, aims to capitalize on existing knowledge and provide new insights on the following aspects defined as the core objectives:
1. To develop a framework to analyze MNE impact on socio-economic development;
2. To develop a model describing the relationship between MNE, FDI and the economy;
3. To analyze the role of public policies in supporting responsible business practices and the Millennium Development Goals (MDG); and
4. To provide case studies and quantitative analysis to support the methodological framework model on health, environment and energy.
5. To develop policy recommendations that will help achieve MDGs in developing countries through close cooperation of MNEs, State and civil society organizations
The project studied how MNEs through FDIs can contribute to poverty alleviation on developing economies on preselected sectors such as food, health and environmental security and electrification. In particular, research focused on such important areas as provision of medicine and improving sanitation, agriculture, electrification of remote rural areas and building local capabilities. The research during the project combined multidisciplinary expertize of the partners and it was carried out by an international, interdisciplinary team involving researchers from Finnish, British and UN as well as Indian, Ghanaian and Brazilian universities and research organizations.
The results of the project serve for policy implications and decision making in the field of MNEs and local government host economies. The importance of governmental policies in achieving significant results in poverty reduction is clearly demonstrated in the outcomes of the project. The study formulated several recommendations to engage multinationals into eradication of poverty and support the UN's sustainable development agenda implementation. The main measures are to improve the ability of the local players to take initiative, and to offer sufficient incentives for multinational enterprises to consider the market valuable enough, as well as to integrate the business with local activity. Furthermore, the focus on the poorest part of the world population, so-called Base of the Pyramid (BoP), can not only contribute to SDGs implementation but bring also additional revenues for the company. Therefore, MNEs need to recognize Corporate Social Responsibility (CSR) as not only a marketing tool, but also the instrument for increasing the customer base. At the same time, the governments have to find the balance between the “carrot” and “stick”; incentives attracting FDIs to the country and regulations requiring MNEs to contribute to local development. Only understanding of mutual dependency and joining forces can lead to mutual benefits contributing both to improving developing countries population well-being but also addressing objectives of international business.

Project Context and Objectives:
The beginning of the 21st century was marked by the United Nations Millennium Declaration which spelled out the societal challenges in an increasingly globalized world. It stipulated that every individual has the right to dignity, freedom, equality and a basic standard of living - regardless of where he or she has been born or lives. The declaration involved a global call to all actors to combat poverty and reinforce health care, to promote human rights and encourage tolerance and solidarity as well as, to improve the protection of the natural environment and strive for sustainable economic development. A set of eight clear targets – the millennium development goals (or MDGs) were set and corporations were expected to be partners of government bodies in efforts to attain them. At the UN Sustainable Development Summit in September 2015 the new document “Transforming our world: the 2030 Agenda for Sustainable Development” have been accepted. The document outlines new set of seventeen objectives referred as Sustainable Development Goals (SDGs). SDGs represent the revised and extended edition of MDGs.
The impact of Foreign Direct Investment (FDI) on local development in host countries has been seen as a growing policy concern in recent years. FDI as a whole is often considered positive for host economies and has been frequently examined from a broad spectrum of angles. Researchers are identifying the ways through which benefits of FDI may manifest themselves and are focusing on linkages and resultant spillovers.
The formation of linkages is thus considered one such strategy by which multinationals can produce positive externalities benefiting host country socio-economic development. They have been investigated from a variety of theoretical perspectives including industrial economics, development and various international business perspectives. However, some knowledge gaps remain. For instance, studies have invariably concentrated on manufacturing with little attention paid to services. This is surprising given the fact that the services sector represents a largest share of global FDI flows. Services-sector FDI contributed in 2011 around $570 billion accounting for 40% of world inward FDI stock.
Similarly, there are a number of other contextual, theoretical and methodological gaps, which can be identified in existing studies on the impact of FDI in developing countries. Contextual gaps include a lack of work on FDI and its impact on poverty reduction and sustainable development. Theoretical gaps concern the limited number of studies focusing only on the manufacturing based on supplier/ buyer relations and labor economics. Methodological gaps concern mainly that research has mostly been done based on secondary data and economic perspective.
This project aims firstly, to review the current literature on the impact of FDI and linkages and examine how this may be applied to both manufacturing and services. Secondly, to examine, through empirical work what exactly is the impact of FDI on poverty reduction and sustainable development. And finally, to present a framework that can be used to systematically study these phenomena. This framework also enables us to compare the impact of MNE activities in developed versus developing countries.
While FDI in a country as a whole may directly impact income generation and employment creation with associated positive externalities of income-trickling down to lower income communities, the impact of MNE activities may be different in different sectors. This is evident given that it is not only the quantity of FDI that matters, but also the way in which it is transformed into a business in the local economy with concomitant generation of positive and sometimes negative externalities with respect to both local producers, consumers and the environment. Indeed, the innovation of the MDG/SDG is to go beyond the debates on the relationships between economic growth and economic development, to recognize sectoral specificities and insist upon a set of basic goals to be attained in essential sectors such as food, medicines, water and sanitation and energy. In terms of inclusion, the main target group was women. Therefore, in order to understand the contribution of MNEs to the attainment of the MDG/SDG, it is necessary to study the activities of MNEs at both a macro and a meso level, especially in essential commodity sectors.
MNEs may impact local development in several ways: (i) through their direct production and marketing activity which creates employment and products i.e. FDI; (ii) through generation of new business opportunities for local firms; (iii) through the creation and diffusion of innovations – making them accessible to populations that never enjoyed them before and finally (iv) through corporate philanthropy and socially responsible investment. However, in the process, scholars have noted that MNEs may generate negative externalities such as: a) uneven development, dualism and inequality, b) a fragmented consumption pattern suited only for a small proportion of the population, c) local funds being wrongly allocated, not in accordance with social needs; d) environmental degradation and e) influencing government policies, often unfavorably to social equity and development. Thus, it is possible that the activities of MNEs have contradictory impact on the attainment of the MDG/SDG, which again calls for a study both at a macro and a sectoral level. Also one of the key issues inside the project are the interdependencies between business and socio-political actors. These are addressed through gaining legitimacy and how that affects the socio-political market and vice versa.
Depending on the nature of their industry and strategy, MNEs make location choices for their Foreign Direct Investment (FDI). Previous research (Hadjikhani & Ghauri 2001 and Hadjikhani, Lee & Ghauri 2008) has shown that MNEs activity in host country can be analyzed from two perspectives. First, that is purely commercial where they choose the most appropriate entry mode, the level of autonomy to be given to the subsidiary and the role it will play in the host economy that whether it would transfer some knowledge to local firms by establishing supplier and distributor relationships or not. Second, MNEs work on the society by establishing relationship with the social actors in the society to improve communities and environment as well as to create job opportunities and capability enhancement. These activities of MNEs are moderated by the host government’s policies and regulations, for example local content rules, and contribute towards the economic development and poverty reduction in the host economy.
Although the preliminary goal of MNEs is to make profit from their investments, this goal cannot be achieved unless they show commitment and achieve legitimacy in the local market. The economic sector, particularly the presence of foreign firms and their externalities on the local market, influence the social welfare and political stability that is essential for economic development and poverty reduction. Moreover, the relationships MNEs develop with local firms such as suppliers and distributors create positive linkage effects on local firms and their capabilities.
This type of introspection from various angles and levels of study, is very important because even as MNEs pursue their globalization and foreign investment strategies, it has been noticed that the benefit-generation from their activities is decreasing. Indeed, disparity in benefits from globalization is much greater now than 50 years ago. Out of the world’s 7 billion people, 2.5 billion accounting for 40% of world population live on less than $2 a day and 1.3 billion people (a fifth of world population) live on less than $ 1.25 a day. Despite technological advancements, the spread of prosperity is extra-ordinarily un-equal. The MDG, aimed to reduce the proportion of people living in extreme poverty by half by the year 2015. However, in the last two decades the progress is rather mediocre. Only China has been able to lift millions from poverty, but if we take the China factor away, the picture is still rather dim.
What is the part of MNEs in this failure to combat poverty? This question is difficult to answer because at present there are huge gaps in our understanding of the interrelationships between FDI and economic development and especially poverty reduction and this lacuna only deepens at the sectoral level. Thus, in order to develop a comprehensive framework to analyze the impacts of companies on socio-economic development and well-being, it is necessary to study MNE activities not only at the macro-level, but in sectors which matter the most for daily existence. This is exactly what this research project intends to do.
At present, the international context is characterized by a growing income gap, also accompanied by a growing health gap and improving access to essentials like food, medicines and safe toilets can help reduce these disparities. Current research focuses on these challenges by conducting a series of field and case studies, mainly in agriculture, healthcare and sanitation industries in India, managerial capabilities in Africa and electrification in South America. On the base of both qualitative and quantitative analysis of MNEs effect on MDGs project aims to define policy recommendations for countries and their governments, and strategy recommendations for MNEs and civil society organizations. Policies are drawn from comparison of existing programs in attracting FDI, in addressing health issues in developing countries, and in electrification of rural areas and sustainable development.
Our methodology can be described as follows. We adopt a systems’ approach to understand how products, services and knowledge are manufactured, generated or absorbed within a sector or a nation and what access, capabilities, markets and economic growth trajectories they encourage. This means that our field of study will include the main actors of an economic system such as firms, state, universities and public laboratories, consumers, intermediary organizations, and civil society – with specific focus on MNEs. We will study how MNEs formulate their strategies to navigate the possibly conflicting pressures of global competition, national specificities and national/international regulatory frameworks. Such a systems’ perspective is required to identify policy frameworks that can facilitate attainment of the MDG, while keeping in mind the objectives, strategies and constraints of the different economic actors in the system.
We have three focus points. First, the impact of FDI on poverty alleviation will give us an idea of the impact of MNE strategies at the macro level. The focus will be on income generation, employment generation, capacity building and poverty alleviation. Then, the meso landscape will be studied along two streams namely health and energy. The health status of a nation’s citizens is determined by many factors such as poverty, food security, quality of water and sanitation, access to health care and medicines, education, empowerment of marginalized groups, capabilities of the local industries, cultural and socioeconomic characteristics etc. Of these we will study three sectors providing basic essentials: agriculture, medicines and sanitation. The creation and diffusion of renewable energy technologies is viewed as a key to promoting sustainable development. In a general sense, sustainable development refers to development trajectories that meet the needs of the present without compromising the ability of future generations to meet their own needs. It is based on the premise that everything that we need for our survival and well-being depends, either directly or indirectly, on our natural environment, which therefore must be preserved and not degraded.
An important goal of the project is intensive dissemination of research results and define exploitation opportunities. It is necessary to disseminate the key message of the project to the widest possible audience. The key message of the project is how multinational companies could integrate with and create shared value within their operating environments, and how such value-creation could be further promoted. To disseminate this key message, the project provides a framework for analyzing MNE impacts on socio-economic development and delivers this together with the practical findings, best practices and policy recommendations for the use of the European Commission, United Nations and the other important stakeholders. Dissemination activities addresses a broad target audience, including research community, policy-makers at various levels (UN and EU-levels, national and regional levels), business community, NGOs and also public at large, for which various tools of communication were utilized. Dissemination tools include regular project newsletters published on project website (www.mnemerge.com) project promotion in social networks (Facebook page: www.facebook.com/mnemerge/) regional workshops and seminars, policy briefs and conference presentations and publications (both academic and for general public).
In conclusion, we reaffirm that MNEmerge seeks to identify modes of MNE collaboration with other societal stakeholders including the governments which permit the business sustainability while ensuring sustainable development of society as a whole with the ‘environment’ being a passive stakeholder. Efforts will also be geared to develop tools and aids for decision making that can facilitate the implementation of the aforesaid recommendations. Only through such multi-level and multi-sector studies can we aim at a mapping of MNE strategies that can contribute to the attainment of the MDGs/SDGs in terms of poverty alleviation as well as sectoral goals.
Our approach combines expertize from four continents; Europe, Asia, South America and Africa. The internationality of the project means that the results of the MNEmerge project are indeed global, and widely applicable in multiple contexts, geographical locations and economic conditions. Through the wide global presence and multicultural consortium we can assure that the findings and results of the project are disseminated over multiple locations, both on theoretical as well as on practical level.

Project Results:
The project was divided into six work packages (WP), which aim to support progress of the research step by step as well as provide the essential results in deliverables. WP 1 focuses on developing and building relevant starting ground and framework for the research with studying the role of MNEs and FDIs. This affects to both WP 2 and WP 3. WP 2 concentrates on the implementation by analyzing the field with three case studies in Asia, Africa, and South America. WP 1 and WP 2 connect to WP 3 where the methodologies to measure the impact of MNEs and FDIs in developing countries are developed before and after the analysis and field work in WP1 and WP 2. By using the results from the work done in WP 1, WP 2, and WP 3 we conduct policies and recommendations in WP 4. These project results will ultimately be disseminated and exploited through WP 5, which uses and disseminates the results from all WPs during the whole project. WP 6 also goes throughout the whole project making sure that the project activities follow the given concepts goes according to the plan and budget.
WP1 Framework Building
First of all, WP1 “Framework Building” aims to formulate framework that can be used to systematically study the impact of FDI on poverty reduction and sustainable development. This framework also enables us to compare the impact of MNE activities in developed versus developing countries. The process of framework building includes
• studying of current literature on the impact of FDI and linkages and examine how this may be applied to both manufacturing and services;
• empirical examination of what exactly is the impact of FDI on poverty reduction and sustainable development;
• presentation of a framework based on preliminary results of literature review and empirical examination.
In order to address the theme of poverty reduction by MNEs, we drew on literature on capability enhancement, linkages and spillover effects. Usually MNEs bring advanced technological skills into the host country, so host governments promote FDI in terms of sourcing locally and investing in relationships between MNEs and local firms. It provides opportunity for capability enhancement of local firms, which can be a key step to sustainable economic development and can have a positive impact on poverty reduction.
Based on case studies from India, Ghana and Brazil, we have found that poverty reduction relies on the collaboration between MNE’s subsidiaries with local firms, as well as on the enhancement of the local firm’s capabilities and sustainable development in the society. The case studies highlight that MNEs and NGOs can work in complementary ways. MNEs offer training for staff as well as suppliers or distributors, while NGOs focus on improving the entrepreneurial skills of individuals (e.g. small suppliers or distributors) and providing credit so that they can grow their business (Tasavori et al., 2015). A significant difference between NGOs and MNEs is that MNEs generate significant spillover effects. Spillover effects occur through the use of technology and established terms of trade and quality regulations with which suppliers or distributors have to comply. Another potential spillover effect is the upgrading of product and marketing knowledge for local firms through the MNE’s marketing efforts.
The conceptual framework has been based on the work of Firth and Ghauri (2010) and Miozzo et al. (2012). The framework considers different factors in regard to FDI (i.e. MNEs, subsidiaries, local firms and host country), which can affect linkage formation and, furthermore, are anticipated to have the potential to influence capability enhancement which in turn is expected to have an impact on poverty reduction in developing countries. The framework assumes that MNE strategy, for instance, in terms of the location choice, might influence the capability enhancement of local firms and employees. Furthermore, it assumes that MNE subsidiaries in the host country influence the capability enhancement, depending on factors such as the mode of entry and the subsidiaries’ autonomy and embeddedness level. Additionally, domestic firms (because of their levels of technology) and host countries (because of government regulations) can influence linkage formation and, in addition, are anticipated to affect capability enhancement.
To better understand the assumptions, the conceptual model was embedded into the current academic literature and an analysis of case studies. The emphasis of this project is on the influence of initiatives of MNEs operating in Ghana, Brazil and India either through their subsidiaries or by developing relationships with local firms, thus two cases from each country were presented in the first part of the project.
Case 1 is a Blue Skies, Ghana, which is a subsidiary of Blue Skies UK established in 1997. Its main activity is to produce fresh fruit products for the local and export markets. Case 2 is subsidiary of Nestlé in Ghana, being part of the Central and West Africa region, also managing Sierra Leone and Liberia. Nestlé is a globally leading nutrition, health and wellness company head-quartered in Switzerland. The functions of Nestlé Ghana since its inception in 1957 and the establishment of its factory in 1970 have been production, marketing and sales of a product range that includes Maggi (food enhancer), beverages, confectionary, infant cereal and infant formula.
Case 3 is the acquisition of a state-owned company Gerasul, in the year 1998 by GDF Suez in Brazil gained the head office trademark “Tractebel Energy” by the year 2002. The main business of company is commercialization of energy, which it generates using six hydroelectric and five thermal electricity-generating plants installed in Brazil. Case 4 is a Reason Technology. A company was founded in 1991 in the city of Florianopolis, Brazil, works on developing value-added solutions for major companies in the industrial energy sector using only nationally developed technology.
Case 5 is Novartis, India, which has its global headquarters in Basel, Switzerland, is present in India through Novartis India Limited. The Pharmaceuticals Division at Novartis, researches, develops, manufactures, distributes and sells branded pharmaceuticals used to treat diseases and conditions across a range of therapeutic areas, including auto-immunity, cardiovascular, dermatology, infectious diseases, metabolism, neuroscience, oncology, ophthalmology, respiratory, rheumatology, and transplantation. Case 6 is Sanofi, India, which is the subsidiary of Sanofi, one of the world's leading pharmaceutical companies and has its global headquarters in Paris, France. Sanofi India is a pharmaceutical company selling vaccines, biologicals, branded generics and consumer healthcare (OTC).
Case findings show that the linkages between MNEs and local firms are strong. Local firms and MNEs often do not see each other as competitors. Instead, they work together to improve the infrastructure and adopt new technologies. In some cases, they are also collaborating in exploring new markets outside their home country.
There is some evidence that MNEs tend to be more dominant players in the relationship with local firms. Local firms tend to follow MNEs’ guidance and some local suppliers have no choice but to comply with MNEs’ terms and regulations. This imbalance of power has created some negative side effects such as monopolistic practices of MNEs, and reduced adaptation to serve local markets, particularly at Base of the Pyramid (BoP) level, as well as artificial scarcity to ensure a certain level of prices and profits. The findings show that the subsidiaries when established identify their local networks and form linkages with local firms with the technical support from the headquarters. However parent MNEs do not require total control in the formation of such linkages. The autonomy of subsidiaries in establishing local ties allows subsidiaries to work more closely with the local market players. However, the MNEs’ top management may not feel involved in the local market. Findings show that MNEs may use subsidiaries simply as a way to plough profits back to the home country. In such cases, the attitude of the MNEs is more opportunistic and there is less concern about the development of the host economy.
The linkage between MNEs and local firms are often contractual, and MNEs generally give autonomy to subsidiaries to create linkages with different local firms mainly for the supply of inputs and also to learn from local knowledge. The impact of MNEs on local development is achieved through corporate social responsibility (CSR) programs. Further, the MNEs have positive effect on local suppliers and distributors as they create new demands and new standards of quality, improving their production and providing a ready market for their products as well as creating employment. Hence, changes in the MNEs’ regulations serve to generate continuous spillover effects in the supply chain through compliance requirements both upstream and downstream.
Local firms benefit from relationships with MNEs in the following areas:
• Improving quality control skills
• Developing procurement skills
• Setting up a productive facility
• Training of local employees by the MNEs
• Developing business skills
Notwithstanding the positive spillover effects, there seem to be insufficient regulation on MNEs’ processes and use of natural resources. For instance, due to more liberal safety regulations. MNEs may seek to move dangerous or polluting manufacturing processes from developed to developing countries. This goes against the 7th MDG of ensuring a sustainable environment and can have an adverse impact on public health in the country. The concern is therefore on ensuring that strict regulations on the polluting processes and on the usage of polluting raw materials are in place in developing economies.
The case studies demonstrate slack of activity from a host country government in initiating linkages between MNEs and local firms. In most cases, host country government provided policies and incentives to attract FDIs, for instance through tax free trade zones. In the case of India, research findings show that the government pushes MNEs to establish subsidiaries on green field sites. However, government policies in India tend to restrict activities of MNEs in favor of local firms. In the case of Ghana, the government provides a beneficial environment, policies and incentives for the subsidiaries to thrive. However, the Ghana government does not necessarily decide which sector or domestic enterprises MNEs should operate in and/or with.
In relation to their contribution to the Millennium/Sustainable Development Goals (MDGs/SDGs), MNEs often have established CSR policies. It is clear that when MNEs seek to establish themselves in developing countries, they will perceive social performance as being equally important as economic performance. Key activities were those related to eradicating poverty and hunger, child mortality and maternal health care as well as environmental sustainability. The common outcomes of MNEs’ efforts are:
• Employment generation
• Increased skills and knowledge
• Improvement in hygiene and access to clean water
• Improvement in nutrition awareness
• Provision of education
• Provision of health care
• Improvement of infrastructure in the community including, roads, renewable energy, telecommunications and so on.
Results also shows that MNEs are not alone in these efforts. NGOs and governmental organizations also obtain funding and organize projects to improve the livelihood of the community. In India, government policies restrict the availability of alcohol, drugs and other life threatening products to the poor as these products create a vicious circle of poverty. In Ghana, NGOs help individual farmers to become entrepreneurs by providing training, credit and machinery.
The leader of WP1 is Kings College London (University of Birmingham after amendment). The detailed results of WP1 are summarized in five deliverables: Deliverable 1.1. ”Framework of MNE linkages in host countries”, Deliverable 1.2. “Impact of MNE in developing countries on enhancing general capabilities in these countries”, Deliverable 1.3. “Impact of multinationals on poverty alleviation in developing countries”, Deliverable 1.4. “Impact of multinationals on sustainable development in developing countries”, Deliverable 1.5. “Linkage between energy, sanitation, health and poverty reduction”.

WP2 Field Analysis and Case Studies
After initial development of framework, the research team proceeded with further analysis. WP 2 “Field Analysis and Case Studies” focuses on challenges of improving access to essentials like food, medicines and safe toilets by conducting a series of field and case studies, mainly in agriculture, healthcare and sanitation industries in India, managerial capabilities in Africa and electrification in South America. The results of this work are a number of sectoral studies based on primary (interviews) and secondary data.
Agriculture
The study of agriculture in India describes the dynamics of knowledge creation and diffusion in the agricultural sector and the role of a MNE (Monsanto) and local firms in India. The literature review demonstrated that the knowledge creation process is now more collaborative and is shaped by distinct configuration of networks that each entity possess. Here, the rise of new technology paradigms such as biotechnology, followed by the new set of institutions such as intellectual property rights (IPR), influence the diverse ways in which knowledge is accessed and configured for potential market gain.
While agricultural production, which relies heavily on agro-ecological conditions remains unchanged, the rise of biotechnology has altered the conventional scientific approach for finding solutions for better yields. The case of Indian genetically modified organism (GMO) cotton (Bt cotton) has clearly highlighted such changes. Today, the process of agricultural innovation is strongly punctuated by biotech R&D with multinationals being the knowledge leaders and local actors in emerging countries the followers, which is configured in distinctive ways. Each firm can choose from diverse strategies, considering its strength in the knowledge base constituted by global and in-situ components, to identify its preferred areas of investment. The sectoral specificity, the underlying technology, and the differences in capabilities have presented diverse pathways of catch-up for firms within a country, within a sector and within a product market. The implications for both MNEs and local firms are derived.
Continuous learning and access to upstream scientific know-how provided by the multinational Monsanto via licensing played a major role in the catch-up process. More interestingly, the technological capabilities (low-end) acquired by the local firms via R&D efforts in conventional hybrids made a difference. Besides these factors, identifying the right strategy to combine external and internal knowledge assets to develop Bt hybrids became critical for market success of both local firms as well as the MNE. Also the analysis brought out the importance of supply (of technologies), domestic demand and the development of vertical linkages between agribiotech and seed firms in the catch-up process. The complementarity between the upstream and downstream knowledge components was evident and that the knowledge flow can be bi-directional or circular, with global–local interactions between leaders of in situ knowledge (local firms) and leaders of global scientific knowledge (MNEs) is strongly established.
Access to medicine
The first part of access to medicine was studied on the case of Brazil. Since mid-1980s, the Brazilian Government has been able to provide free antiretroviral (ARV) treatment to its population and, since 1996, it has deployed a universal coverage program. Such universal access program has two main pillars:
1. The manufacturing capacity of state owned laboratories, which supply low-cost off-patented ARVs. These organizations are specialized in drug formulation and, in general, depend on import of APIs from countries such as India and China.
2. The ability of the Ministry of Health to negotiate price reductions for the patented ARVs. This negotiation process involves compulsory license threats based on the above-mentioned manufacturing capacity.
Cooperation between MoH (Ministry of Health) and pharmaceutical MNEs have been essential component of the Brazilian Universal access program. But, in most of the cases, these collaborations were result of public pressure of MoH rather than “good will” of pharmaceutical industry MNEs.
The case studies represent seven episodes of negotiation between the Brazilian Government and foreign pharmaceutical companies for six different drugs. The case studies are aligned with the existing literature that acknowledges the critical role of manufacturing capacity on credible threats of compulsory license, as well as the political and economic pressure over countries that choose to pursue this strategy. The policy recommendation that immediately derive from this is that developing countries must work to build their bargaining strengths. One line of action is the construction of excellence centers for drug deformulation. Using other flexibilities provided by the TRIPS Agreement, such as research and Bolar exemption, these centers could accelerate the introduction of generic versions in case of compulsory licenses.
The Brazilian ecosystem of price negotiation has evolved over time. One decade after the first price negotiation of patented ARV, the Brazilian Government was able to consolidate an environment in which pharmaceutical MNEs found more advantageous to transfer the technology to state-owned laboratories and local companies, through a public-private partnership (PPP) model. Local production of drugs, including the active pharmaceutical ingredients, can also be important for knowledge accumulation. The development of newer and more complex drugs coped with obstacles to import patented drugs from India exposed to the world the Brazilian fragilities in active pharmaceutical ingredients (API) production. The current industrial policy aims at closing such gap trough public-private partnerships (PPP) coped with public procurement. However, local production must be carefully assessed in terms of competiveness otherwise higher prices my exclude patients from treatment. In addition, partnerships that involve technological transfer for patented drugs can be a win-win solution as long as they do not have abusive provisions, which may hinder access to the respective drug(s) in the medium run. It is worth noting that governments may not need to resort on compulsory license if they apply stricter standards in examining patent applications. Undeserved patents and unsound IP policy, including implementation of TRIPS-Plus provisions, can be detrimental to access to lifesaving medicines.
Therefore, governments should define and enforce clear guidelines on what does and does not deserve a patent. Moreover, it is hard to guarantee that such guidelines are adequately applied for every case, IP laws should allow – and public policies should encourage – third parties to challenge the validity of both pending patent applications ("pre-grant opposition”) and granted patent ("patent challenge").
Other aspects of access to medicine in developing countries were revealed from the case of India. Prior to 1970s, the Indian pharmaceutical market was largely controlled by MNEs. However, the policy measures taken by the government in the 1970s including the adoption of process patent regime as against a product patent regime, enabled domestic pharmaceutical industry to grow, making India not only self-sufficient in medicines but also the ‘pharmacy of the south’. Nonetheless, there has been a renewed interest of MNEs in the Indian market as is evident from the MNEs’ recent takeovers of and mergers with Indian firms. Whereas, the contribution of MNEs in the overall pharmaceutical market in India may seem insignificant, a deeper enquiry, at narrower levels of therapeutic classification reveals that certain therapeutic segments demonstrate significant dependence on MNEs in terms of sales values, number of players as well as the number of formulations and brands marketed in the private sector.
India has a flourishing indigenous pharmaceutical industry that supplies quality generics at affordable prices not only to the domestic market but also to various countries (both developing as well as developed) across the world. Analysis also support the fact that India does not rely on MNEs for supplying generics to a great extent with the exception of a few therapeutic segments.
However, the role of MNEs in innovation through investment in Research and Development (R&D) as well as introduction of new medicines developed in different parts of the world in India is important. Finally, it was observed that there is a significant delay in the introduction of new medicines in the US and India for a large number of medicines and that a substantial number of medicines that received market authorization between 1995 and 2012, were not available in India as of 2014.
The contribution of MNEs in Indian pharmaceutical market is significant in terms of value as well as the number of formulations and brands marketed. The contribution of MNEs is considerably higher in certain therapeutic segments such as vaccines, hormones, etc. On the other hand, their contribution to certain disease categories such as neglected tropical disease is very limited. Moreover, MNE’s contributions in therapeutic categories- TB, HIV and Malaria, which are the focus of MDGs, is also limited in terms of value. We also observed that MNEs contribution is significant in terms of bringing new chemical entities (NCEs) to the Indian market.
Further, MNEs contribute significantly to domestic pharmaceutical industry through positive spin-offs and spill-overs as a result of FDI investments both green field as well as brown field. Some of the areas of productive gains include faster adoption of new technology, adoption of higher quality standards, new production methods, adoption of new management practices and increased access to international markets. However, MNE’s contribution in terms of providing access to medicines especially for the products under patents is limited. Overall, the MNE’s contribution to public health needs of the country is not as spectacular as compared to contribution to trade and investment leading to pharmaceutical industry development.
Sanitation
The objective of sanitation study in India was to identify the conditions necessary and/or sufficient for a sustainable delivery platform for the diffusion of safe toilets. For this purpose, a simple framework was developed to represent the ecosystem of the sanitation sector for rural areas in developing countries and the main actors involved. The evidence obtained during the MNEmerge survey revealed faulty constructions that make toilets difficult to use, costlier than they need to be and which taken together, finally, lead to abandoning of toilets. Report concludes that though low cost toilets installations seem to be simple in terms of technology and implementation design, in reality there is an urgent need for a capability building. For success, it is necessary for all actors in the delivery platform to have a clear shared understanding of not only the ‘implementation targets’ of the physical structures to be installed and their functioning, but also the ‘impact targets’ aimed at. Impact outcomes depend not only implementation quality, but also on the motivation and education and accompaniment of the targeted beneficiaries. Because the latter play a crucial role in the impact generation, the inter-relationships between implementation efficiency and impact outcomes are determined by adoption and usage success. Thus, especially MNEs using social enterprises to implement sanitation drives, must have a shared understanding and a common intention with respect to beneficiary inclusion, implementation targets and impact targets. They must also ensure that the delivery platform actors possess the necessary capabilities to build safe toilets and motivate their effective usage. To facilitate the above a checklist has been proposed.
Access to energy
The universalization of electrical energy supply proves itself to be one of the biggest challenges of the millennia, and an obstacle that must be surpassed in order to obtain social and economic developed nations throughout the entire globe. Access to electricity was explored with the case of Brazil. The electrification program implemented by Brazil government resulted in significant improvements in well-being, leisure, healthcare, work conditions, productivity and an overall better quality of life for all communities and individuals. Generating this much essential resource in isolated regions, however, has many difficulties and has shown itself to be quite a challenge. While this may prove a complication, it emerges as a great opportunity to set up a more renewable approach, with many projects having already been built and many more yet to be installed. The study compares the pros and cons of the following systems: biodiesel and vegetable oil, solid biomass combustion and gasification, small hydro plants and hybrid systems (Eolic – PV – Diesel). Different arrangements might be considered when attending to the task of generating a clean, sustainable and reliable source of electricity to isolated communities.
Capability building
The aim of the next case was to fill the gap in academic, policy, and practical research by examining the transfer of managerial knowledge from MNEs to local enterprises in Ghana. The second aim is to investigate the nature of this knowledge transfer. The managerial and technological knowledge transferred or spilled-over to the local community may increase the capability of the local management and workforce, and enhance economic and human development in various aspects. Overall, this case study focuses on the linkages through which knowledge is transferred to local firms and people.
The result of the study shows that in both European and Chinese MNEs, that managerial knowledge did transfer and spillover within the MNEs to their local employees and managers. Two things had a significant and direct impact on workers’ aspiration for their future development: longer working time experience at the firm and the training they received. Advanced management practices adopted in the MNEs also increased the levels of aspiration of the local workers for future development, such skills enhancement opportunities and spiritual recognition in the form of nonmonetary rewards or positive feedback. However, management practices and activities that only serve to exploit workers’ existing skills and capabilities may well enhance the productivity of the workers, but not their aspiration for future development.
Amongst both workers and managers, learning potential was higher in the western MNEs than in Chinese MNEs. However, the Chinese companies do make efforts in order to bridge this gap. It emerged that employees in the European MNEs perceived the foreign managerial staff to be less approachable.
While the foreign managerial style was preferred in both cases, local management staff was preferred. The combination of this evidence highlights the role of cultural embeddedness, which should be investigated at length when evaluating the knowledge diffusion potential of FDI. The extent of local-foreign exchange between MNEs and local firms was found to be limited, with variations between sectors and firms; and a clear improved performance in those instances where national policy took an active role in promoting the diffusion of knowledge. Such results highlight the crucial role of national policy in reaping the numerous potential benefits of FDI. Moreover, the research found that some Chinese MNEs outsource to local contractors, while others do not due to quality concerns. This suggests local capability building is also crucial for successful FDI-facilitated knowledge transfer.
The results shows that gender and skill inequality issues are not completely eliminated by MNEs presence. Indeed, male and more highly educated workers are more likely to be employed by MNEs. On the other hand, MNEs are more likely to offer permanent than fixed term contracts, which provides certainty and stability to employees. However, overall, in both Chinese and European MNEs, workers were found to be more satisfied with foreign sector employment due to improved working conditions, health and safety enforcement, learning opportunities, and employment benefits.
Findings from the research have important policy implications. The critical issue is how Ghana can enhance such transfer and spillovers for the greater good of its economy. The policy options to address this issue emanate from the following, among others:
• Strengthening good bilateral relations between Ghana and the investing countries
• Promoting education
• Creating incentives for managerial knowledge flows and spill-overs
• Encouraging MNEs to contribute to socio-economic development.
To summarize, the results of WP2 contribute to validation of theoretical framework (WP1) and provide the background for activities in the following WPs. UNU-MERIT University was in the leading role for WP2, receiving strong support from Oxford university and Brunel University (University of Kent after amendment) due to the work packages direct linkage with different methodologies and data collection. Also the associated partners from developing countries, PHFI, CSIR and INESC-Brazil will have an active role in helping with the field work. The results of case studies undertaken during WP are summarized in following deliverables: Deliverable 2.1. “Validation and comprehensive literature study”, Deliverable 2.2. “Results of Sectoral Studies”, Deliverable 2.3. “Indicators for MNEs”, Deliverable 2.4. “China MNEs in Africa”.

WP3 Methodology
The objective of WP3 was to develop methodologies and collect data both for qualitative as well as quantitative analysis of MNEs effect on MDGs based on the results of the previous WPs. The main results of WP3 are the methodologies for analyzing existing policies and projects, which help to update and develop new and improved policies and strategies for MNEs, the State as well as civil society organizations.
In particular, have been developed methodologies for assessing the MNEs role in poverty reduction through capability building; sanitation improvement; sustainable energy provision. In respect to study objectives and external factors (such as e.g. data availability, legal limitations to use the data, etc.) various study design have been applied and tested. Primary data collection was conducted in the forms of small and large surveys, as well as large scale case studies between multiple stakeholders. Employed methodologies include in-depth interviews, social network analysis and statistical analysis such as structural equation modelling.
In order to increase the reliability of study and collect broader specter of data multistage methodologies have been applied. Thus in the study on capabilities building the research design consists of three stages:
1. in-depth case studies based on interviews to highlight existing barriers in knowledge transfer
2. social network analysis to map the relevant stakeholders and actors in knowledge transfer process
3. statistical data collection and analysis to quantify the scope and intensity of the network relationship and nature.
Study on sanitation combined meta analysis of existing literature which helped to build initial model for estimation with large scale survey and consequent data analysis. The important output is the questionnaire designed to assess the sanitation issues and associated problems.
Study on electrification provides an alternative approach and combines extensive application of secondary data together with interviews and site visits.
Therefore, the results of this WP consist of several research methodologies which can be applied for analyzing the MNEs impact in various areas. The methodologies elaborated in this WP were further applied in the following WP4 for developing policy implications.
WP3 was led by Oxford University, receiving support from Kings College London and Brunel University (consequently University of Birmingham and University of Kent after amendment). The associated partners from developing countries, PHFI, CSIR and INESC-Brazil had an active role in helping with the modification of methodologies to match the specific conditions in developing countries. The reported results of the WP3 was represented in following deliverables: Deliverable 3.1. “Methodology and Data Collection FDI and poverty”, Deliverable 3.2. “Methodology and Data Collection medicine and sanitation”, Deliverable 3.3. “Methodology and Data Collection sustainable energy”.

WP4 Policies
The objective of WP4 was to define policy recommendations for States, and strategy recommendations for MNEs and civil society organizations. Policies are drawn from comparison of existing programs in attracting FDI, in addressing health issues in developing countries, and in electrification of rural areas and sustainable development. The main tasks performed during the WP4:
● Developing policies and recommendations that will help achieve MDGs in developing countries;
● Developing policy guidelines that would help evaluate the existing FDI policy with regards to its impact on.
The analyzed areas include policies on sanitation, medicine, health services, agriculture, electrification and poverty reduction. The results demonstrate the linkages and interconnections between MDGs/SDGs and discuss the impact and existing problems associated with FDIs. The analysis of current situation and comparisons of policies adopted in different countries lead to elaboration of clear policy implications aiming to increase positive impact of MNEs on host country and contribute to UN sustainable development agenda objectives.
Policy implications on sanitation
Till recently, in all policy briefs and all government departments – usually the terminology employed was ‘water and sanitation’ and not ‘sanitation and water’. This reflected the secondary status of ‘sanitation’ vis-à-vis ‘water’ and serves to explain the delay in the attainment of sanitation targets. Understandably, one cannot live without water, while there are natural alternatives to the use of a toilet. Furthermore, for both policy makers and consumers alike, the nature of water and sanitation as a ‘commodity’ was very different. Water supply was considered as a merit good, that everyone deserves by human right, whereas sanitation was viewed by many as a private good to be invested upon by an individual household. Current study shows that this gap is decreasing. Today, both sanitation and water are considered as quasi-merit goods within a system, wherein a diverse number of economic actors play an important role. It also reflected in the revised status of sanitation within the SDGs.
Public investment must continue to make safe sanitation accessible to all, for lack of access to sanitation makes the area/region/community more prone to diseases, which are directly or indirectly linked to non-safe disposal of excreta. Lack of access to sanitation especially makes vulnerable populations like HIV/AIDs & TB patients, infants, pregnant women etc. more vulnerable to excreta related diseases. Since children and adolescents spend a major portion of their lives in schools, sanitation in this lieu is equally important. The installation of toilets is a necessary but not sufficient condition for the reduction of diseases for it is complementary to access to water, waste management and hygiene behavior.
Not only physical availability, but quality also matter. Thus, public investment in infrastructure must take into account the nature of the joint presence of these complementary assets and capabilities for maximal returns.
There is still scope for improvement in technology design. Environmental safety is often sacrificed at the altar of meeting targets of sanitation drives by building pit latrines that leach out faecal matter into the surrounding soil and water. The ecosan approach and models need further improvements for adoption. There is ample scope for improvements in decentralized design that can make use of human and animal excreta and sludge for creation of bio-energy.
Nevertheless, technology design and physical installations are one component of the solution, which must be regarded as a multi-component solution platform – including awareness and motivation generation for behavioral change. There are challenges on demand side to get people to invest in toilets. There are challenges on demand side to get people to use toilets even after they have acquired access. Furthermore, for improvement in health, toilet usage has to be embedded in hygiene behavior habits starting from childhood.
Given State failures in most developing countries to tackle the needs of the poor, and a global trend to markets liberalization, market-based delivery as well as community led initiatives for sanitation coverage is gaining ground. Still, despite their noted advantages, both market-based delivery systems and community led initiatives are far from being perfect in delivering safe sanitation. To deal with these problems new forms of multi-stakeholder platforms are emerging, but the necessary and sufficient conditions for the successful creation and adoption of sustainable sanitation systems are not clear. Multi-stakeholder platforms suffer from the same strategic challenges as public private partnerships such as adverse selection and moral hazard. Thus, appropriate platform-specific incentive systems have to be designed for success.
Finally, despite these challenges, for sustainability, SDG6 including universal access to sanitation and elimination of open defecation remains central to attainment of the SDG through its interlinkages with other SDG such as health (SDG3), gender equality (SDG5), sustainable cities and communities (SDG11), responsible consumption (SDG12) and life under water (SDG14).
Policy implications on medicine
The studies on medical sector accomplished in WP2 enabled research team to elaborate policy recommendations for the Government and strategy recommendations for MNEs as well as for the civil society.
Policy recommendations for the Government:
1. Pharmaceutical regulation in India is fragmented and involves various departments under several ministries. The government should try to consolidate its functions with regard to pharmaceuticals in the country under the Ministry of Health and Family Welfare (MoHFW), as far as possible. This would ensure better functioning and coordinated efforts towards the cause of public health in the country. For instance, the National Pharmaceutical Pricing Authority (NPPA), which is responsible for drug price regulation in the country and is currently under the Ministry of Chemical and Fertilizers should be brought under the MoHFW.
2. The current FDI policy in India does not particularly incentivize greenfield investment over brownfield investment. As a result, majority of FDI inflows in the country have been in the form of brownfield acquisitions. Regulators such as the Department of Industrial Policy and Promotion (DIPP) and the MoHFW as well as academicians have expressed their concern over this phenomenon. The Government should particularly incentivize greenfield investment over brownfield investment by creating a conducive policy environment for the MNEs to set up fresh infrastructure and operations in the country.
3. The degree of concentration of Indian pharmaceutical market is high. The concentration is on account of both MNEs as well as domestic firms. The recent large number of mergers and acquisitions is only going to increase this concentration further. The Competition Commission of India (CCI) should evaluate proposed mergers and acquisitions in the pharmaceutical sector judiciously so as to ensure that the situation with respect to concentration does not worsen as increased concentration could lead to higher prices among other things. This involves defining the relevant market for competition analysis prudently. If the analysis indicates that the proposed combination could have an appreciable adverse effect on competition, it should propose suitable remedies such as divestiture of particular segments that would be adversely affected.
4. In the new IPR policy released by the Government of India in May, 2016 it is acknowledged that a strong and balanced legal framework is the need of the hour so as to ‘balance interests of the right owner with larger public interest’. The TRIPS flexibilities that have been incorporated within the Indian patent act should be utilized judiciously so as to maintain this balance.
5. The current drug price control policy in India has been critiqued for being both low in coverage as it covers only about 17% of the market (in terms of market value) as well as impact as price reductions have not been substantial. The government should increase the coverage of the policy. One possible way is to include all the strengths and dosage forms as well as combinations of medicines under the national list of essential medicines under the ambit of price control. This will take away the incentive for the industry to switch production to and vigorously promote medicines not listed in the National List of Essential Medicines (NLEM). Further, the government should explore other forms of price regulation as implemented in other countries such as regulating margins in the supply chain, health technology assessment and so on to bring down prices more effectively.
Strategy recommendations for the MNEs and the civil society:
1. Although the pharmaceutical sector in India attracts substantial foreign direct investment, it has been pointed out by several academicians as well as the parliamentary committee constituted to examine FDI in the Indian pharmaceutical sector that the extent of greenfield investment in miniscule. MNEs should undertake more greenfield investment in the country as compared to brownfield investment.
This would lead to further growth of the pharmaceutical industry in India, capability enhancement through technology transfers, as well as economic development through asset and employment creation.
2. The Competition Commission of India (CCI) evaluates the proposed mergers and acquisitions in all sectors of the economy including the pharmaceutical sector. MNEs should continue their support in the process of the evaluation of proposed combinations by CCI. This includes providing the required information and data to facilitate the evaluation process. Further, they should be willing to comply with the recommendations by the CCI to remedy competition concerns, if any.
3. It has been pointed out by researchers and academicians that MNEs often engage in evergreening practices to keep generic competition at bay for longer durations of time. MNEs should refrain from such practices. They should rather focus on research efforts targeted at breakthrough innovations of new chemical and biological entities. Further, upon the expiry of patents, their efforts should be focused on competing with low-cost generics on a level playing field as in other branded generic markets.
4. MNEs should continue to comply with the provisions of price regulation policy in India. This includes reducing prices of the brands priced above the ceiling price notified by the National Pharmaceutical Pricing Authority (NPPA) as well as increasing the prices of their brands annually within the limits prescribed within the National Pharmaceutical Pricing Policy (NPPP), 2012.
5. An earlier investigation into the prices charged by MNEs versus Indian firms for the top selling formulations in the private market for HIV, TB and Malaria medicines revealed that at an average, MNEs charge higher prices than Indian firms for most formulations. MNEs should consider bringing down prices of their brands of generic medicines in order to be more competitive in the Indian market.
6. The civil society should proactively file pre and post grant oppositions flexibility allowed under TRIPS- against patent applications that do not meet the patentability standards prescribed by the Indian patent act to prevent the grant of frivolous patents.
7. The civil society should also facilitate the process of evaluation of proposed combinations by the CCI by actively filing information on any concerns that they may have regarding the proposed combinations leading to reduced access to medicines.
8. Finally, the civil society should continue to raise concerns regarding the limitations of the current policies on price regulation as well as foreign direct investment in the interest of public health and medicines security for the Indian population.
Policy implications on agriculture
Standard representations of innovation system include usual economic actors. In addition, ‘Nature’ must also be considered as an actor in the innovation system for two reasons. First, the flows of outcome variables such as yield, revenues, costs and even knowledge transfers depends on the state of Nature as an actor via productivity. Indeed, agricultural productivity depends on ecological factors such as soil quality and pest incidence. These factors are just as important to the production process as the standard inputs of the production like land, labour, water and nutrients. Second, the state of Nature is impacted by the actions of economic actors in the innovation system. The bio-physical elements such as soil, pests, air and water that make up ‘nature’ responds to the production activities of the economics actors in the system through change while achieving its natural equilibrium.
At the same time, as an actor in the innovation system, Ecology is distinct from other economic actors. While the play of economic actors may be predictable to a large extent by assuming that they are driven by maximization of self-interest, only the short run responses of Nature can be forecast based on the existing science base. Consequently, a ‘real’ scientific uncertainty may be associated with adoption of new techniques in agriculture depending upon the nature of the innovation. The nature of the payoffs that drives the play of Nature in the innovation system is also very different from that of the standard economic actors. Ecology or the bio-physical entity, does not seek to optimize to maximize self-payoffs vis-à-vis the moves or actions of other economically rational players. It is a non-strategic actor that responds with passive actions of self-organization as dictated by universal biophysical laws. Identifying the outcomes precisely in a complex system is not possible and the predictions come with a degree of uncertainty. However, it is easy to identify that the evolutionary response of Nature to achieve biophysical efficiency is analogous to the evolutionary behavior of economic actors trying to achieve economic efficiency. Thus as ecological economists have long argued the integration of ‘Ecology’ in the economic system or in our case, the ‘innovation system’ is necessary to study sustainable technology transitions. This general point of departure brings out interesting aspects to both supply and diffusion of innovations during major technology paradigm shifts.
Major technological transition in the history of agriculture came about in the form of green revolution (GR) modern varieties and transgenic crops (genetically modified crops or GM crops). While the transition to GR increased the overall productivity of the sector it is also argued to be causing resource degradation in countries like India partly due to the technological solutions and partly due to unsustainable practices of farmers. At the same time, while the transition to agricultural biotechnology punctuated by the diffusion of genetically modified plant varieties is seen as a hope by many, there is still division of opinion on the long term health and environmental impact of this paradigm. Therefore, the dynamics of technological transitions or paradigm shifts pertinent to agricultural production need special attention in view of growing concerns about sustainability.
Finally, within the broader context of technology paradigm shifts in agriculture, especially on the supply side of innovations, there are two interesting aspects that oblige attention. First, with the rise of biotechnology private sector dominance became evident. In fact, the paradigm of agricultural biotechnology is strongly dictated by the innovation strategy of private sector actors. Further globalization has ensured not only the strong emergence of multinational firms in the sector but also the geographical proliferation of innovation activities.
The recent economics and international business literature suggests that local actors are increasingly playing an important role in the global production and innovation networks. Given the access to technologies and the strengths in context-specific or in-situ knowledge base local firms in emerging country seeds sector can potentially catch up with the frontier technologies in quick time. However, there is little attention being paid in studying this particular aspect of technological catch-up in agricultural innovation in economics or international business literature. Therefore, a conceptual framework that characterizes the knowledge base required for agricultural innovation against the backdrop of globalization and rise of biotechnology is developed and applied to examine the catching up of Indian seed firms with Bt technology. The role of knowledge base in the catch-up process and the dynamics of knowledge creation or acquisition by the local seed firms based on their interactions with global as well as other local entities are analyzed.
To summarize, MNEs attempting to localize their high value innovations in emerging countries will do well in terms of legitimacy construction if they evaluate a priori the possible exogenous uncertainties or challenge risks issuing from the introduction of the innovation. Then MNE managers have to translate what this means in terms of the three types of uncertainty endogenous to the MNE – to find the right technology fit, to achieve marketing targets at least cost and to maximize innovation rent from localization. Next, this evaluation has to be mapped onto an outreach matrix, specifying the nature and magnitude of effort to build trust with each possible challenger. It must be kept in mind, that local actors may also be useful in sharing the costs of legitimacy construction. Partner selection among local firms and contract design for collaboration should be determined by the latter’s potential for sharing the costs of establishing legitimacy.
Policy implications on health services
Case study of the experience of the Tamil Nadu Health System model leads to various policy recommendations to be implemented by the Central as well as State Government’s across the country. The policy recommendations are as follows:
1. There is a pressing need to increase public spending on health in India for better provisioning of health services across the country. Tamil Nadu’s public expenditure on health which is the highest among Indian states has improved access to healthcare in the state. The high-level expert group (HLEG) instituted by the Planning Commission recommended that public expenditure on health be stepped up from the current about 1.2 percent of the gross domestic product (GDP) to 2.5 percent of the GDP by 2017 and to 3 percent of the GDP by 2022.
2. The success of the Tamil Nadu health system model demonstrates the role of primary health care in increasing access to health care thereby improving the health outcomes of the state. This emphasizes the need for similar focus on primary health care in the priorities of other Indian states as well.
3. A separate Directorate of Public Health in Tamil Nadu manned by highly experienced cadre of public health professionals has made substantial contribution in improving the public health status in the state. This model should be replicated in other states of the country as well.
4. We also observed widespread variability in the public expenditure on medicine across Indian states. Tamil Nadu is among states with the highest public spending on medicines and its resulting success in increasing the access to medicines is commendable. There is a need to scale up public spending on medicine procurement in the country. The High Level and Expert Group (HLEG) report also recommended a four-fold rise in medicines procurement spending by the public sector to INR 30000 (0.5 percent of the GDP) up from INR 6000 crore (0.1 percent of the GDP).
5. The success of Tamil Nadu Medical Services Corporation Ltd. (TNMSC), a pioneer in pooled procurement for medicines in the country is widely recognized for its phenomenal success. This model of centralized procurement and decentralized distribution of medicines should be scaled up and implemented in other states of the country after factoring in the local context.
6. Finally, a strong political will along with the work culture adopted by the different levels of management as well as health workforce in Tamil Nadu has led to commendable performance in implementing various national level and state level programs, besides greater commitment to the cause of public health would go a long way in improving access to health services across the various states in the country.
Policy implications on poverty reduction
Despite the benefits of FDI that comes from transferring the capital and its positive externalities in the host country, it does not happen automatically without appropriate policy interventions by the host country. The survey result had shown that majorities of countries among surveyed are aware of importance in using their policy space to make most out of the existing global financial flows – as demonstrated by the high proportion of respondents reporting to apply policy instruments on selective bases – towards development goals at national level. While this is true, much of the policy priority seems to be given to employment generation than capacity building and knowledge acquisitions. Furthermore, despite the fact that SDG target mention about the environmental technology diffusion and clearly mention to provide ample policy space on these matters, there are, so far, not being well taken up for the purpose of capacity building. It mildly indicates that the consensus on SDGs (though it was built “bottom up”) being made at international arena has not reached well in the actual application of policy at national level in many developing countries.
Science, Technology and Innovation (STI) can play an important role in achieving developmental goals via knowledge creation and capacity building through collaboration. Considering the important role played by the private sector, - including activities by FDI/MNEs in developing countries – effective public and private partnership (PPP) is considered as the future model to pursue developmental targets. However, successful end to such efforts depends very much on capacity to comprehend market forces dynamically to build local capability. More specifically it would require capacity to formulate strategic approach encompassing “attraction”, “linking and embedding”, “aftercare” while enhancing capability of actors and framework conditions. So called “attractive” countries were considered to have conditions such as large market size (population or purchasing power), low cost skilled labor force, high technological capability of supplier firms and physical and institutional infrastructure. The countries equipped with above conditions tend to have better leverage to negotiate with MNEs/FDIs on the terms of collaboration to accommodate corporate interest along with the host country developmental goals. On the other hand, less advantaged countries may have similar governance power to negotiate with large MNEs/FDIs. Considering the magnitude of global financial flow, above situation would only enlarge existing North-South division in STI capability. To correct such current trends, support on capacity building of policy strategy in less “privileged” market conditions is much as needed. The possibility of allowing certain intermediary institutions mediate the negotiation with time limited allowance to differentiated policy spaces until such country reached certain level of capability in agreed sector or technology can be explored.
Policy implications on energy in rural areas
Particular impact of the study the impact of FDI in energy sector in Brazil was placed on adoption of renewable energy solutions for off-grid systems. The research team was interested in the impact of rural areas electrification programs on MDG achievement. Multi-method approach was adopted and the secondary quantitative data analysis (descriptive statistics) was combined with the face-to-face interviews and site visits. To capture the full picture and analyze the problem from different angles the team conducted interviews with various stakeholders (policy makers, MNEs representatives as well as with actual rural areas inhabitants).
Overall, the secondary data on program (LfA) implementation demonstrate the noticeable improvements in the social and economic spheres. However, in-depth interviews revealed the more complex picture. Thus, while some policy-makers, although note some deficiency, in general are satisfied with the MNEs contribution to the regional developments, others are not. The situation is affected also by low level of local firm capabilities, which limits the possibilities for technology and management practices diffusion. Simultaneously, the poor level of local services quality force MNEs either to invest in trainings or to contract other (bigger) services providers.
Combined with the higher costs (due to low population density) that negatively affect MNEs intentions to operate in rural areas. Furthermore, there always exist danger of transferring additional costs to the consumer, which forces government to provide subsidies for firm-operators. Nevertheless, as it was reported, quite often such electrification programs delayed and their initial objectives are not fully met which in turn lead to increased skepticism of local stakeholders to new governmental initiatives.
The adoption of renewable energy-based systems faces the obstacles in form of high costs compared to traditional (e.g. diesel generators) systems. Furthermore, such systems need to have sufficient reserves for capacity increase in respect to growing demand for electricity. Technical sustainability is another important aspect as disregarding this issue may lead to the situation when high investments are made into inferior system, which quickly becomes obsolete in respect to the new technologies. However, even renewable energy systems were considered costly unviable solutions, hybrid systems are better solutions to for remote areas, such as Amazon region, which imposes geographical obstacles (rain forest) to make grid-extension (cheaper solution) viable. Then, such hybrid systems were implemented in remote Brazilian areas to make the electricity access possible.
To overcome above discussed problems, the policy makers need to create the balance between regulations (requiring companies to provide electricity in rural areas) and incentives (which can make such activity profitable, but not at the expense of final consumers). Furthermore, the prerequisite of electrification program success is the involvement of local stakeholders from the very beginning. Such involvement creates not only interest and understanding among local population but also helps in clarifying the program objective in respect to the regional characteristic.
Site visits demonstrated that although electrification per se may lead to certain improvements in rural community quality of life more significant results achieved when electrification programs combined with other initiatives leading for greater industrialization of the region. These activities combined with capabilities building initiatives accomplished in public-private partnership (PPP) may eventually trigger positive feedback loop when growing wealth of the population create additional demand for goods and services and attract FDIs to the region which in turn lead to further economic growth and social benefits.

To summarize, WP4 provides main policy implications in the fields of sanitation, medicine, agriculture, health services, poverty reduction and access to energy in rural areas based on the previously collected data, case studies and literature review. The leading partner in WP4 is UNU-MERIT, however, it received contribution from all other project partners. Especially inputs from Kings College London (University of Birmingham after amendment) and Oxford will have a significant role in the development of new policies. Associated partners from Africa, India and Brazil also played a vital role in the implementation and adaptation of new policies in their respective countries. They also provided feedback on the project and its outcomes, and by so guide it to the right direction starting from the early phases of policy development. The reported results of the WP4 was represented in following deliverables: Deliverable 4.1. “Policy on Sanitation”, Deliverable 4.2. “Public Policy on Medicine”, Deliverable 4.3. “Public Policy Agriculture”, Deliverable 4.4. “Policy on Health Services”, Deliverable 4.5. “Policy design on Poverty reduction”, Deliverable 4.6. “Policies for energy in rural areas”.

WP5 Dissemination and Exploitation
All work packages are strongly interlinked and WP5 “Dissemination and Exploitation” supports the activities of the other WPs by disseminating the project’s research results, events and publications to the widest possible audience and the relevant stakeholders. The key message of the project is how multinational companies could integrate with and create shared value within their operating environments, and how such value-creation could be further promoted. To disseminate this key message, the project provides a framework for analyzing MNE impacts on socio-economic development and delivers this together with the practical findings, best practices and policy recommendations for the use of the European Commission, United Nations and the other important stakeholders. WP5 address a broad target audience, including research community, policy-makers at various levels (UN and EU-levels, national and regional levels), business community, NGOs and also public at large, for which various tools of communication will be utilized. WP5 supported a regular flow of information during the project and guaranteed the availability of the outputs after the project, thus maximizing the exploitation opportunities of the results.
The results of activities performed under WP5 are strategies for communication and dissemination project outcomes. In accordance with them have been launched and regularly updated the project website www.mnemerge.com and project Facebook page https://www.facebook.com/mnemerge. Other results include editing and publishing newsletters, writing and publishing news and short articles about the project, as well as promoting and communicating about the project through various channels, such in the form of direct contacts, conference presentations and representation in external events. The Baltic Rim Economies Special Issues were published in March 2015 and November 2016 as scheduled. As a contribution to WP4, Coordinating stakeholder workshops consisted of two rounds organized by the project consortium. The first round was organized in August and November 2015: India (21.8.2015 additional events on 2-4.11.2015 and 22.2.2016) Ghana (10-11.8.2015) Brazil (27.11.2015); the second round took place in Fall 2016: Ghana (28-29.09.2016) India (4-5.11.2016 15-16.11.2016 (2 events), 19.11.2016) and Brazil (21.11.2016). The other dissemination activities included participation in conference and presentations of the project results. In particular, the following conferences were attended: Academy of Management (06.08.2016) UNIDO 50th anniversary Conference (24.11.2016) EIBA 41st and 42nd Annual Conferences (02.12.2015 and 04.12.2016 consequently). The EU policy brief was organized on 27.10.2016. Consequently, a regular flow of information on the project was guaranteed and exploitation opportunities developed.
The University of Turku was the leading partner in the framework development. Partner organizations participated in the dissemination activities to ensure the widest target audience possible. WP 5 strongly supports the activities in other WPs by taking care of disseminating the project results, events and proceedings to the right stakeholders. The reported results of the WP5 was represented in following deliverables: Deliverable 5.1. ”Communication Strategy, Dissemination Plan: Communication strategy, dissemination plan, website and publication forums”, Deliverable 5.2. “Final Conference, Publications, Proceedings: Final Conference, Conference Proceedings; Targeted dissemination actions for regional policy makers; Special Open-Access Journal Issues”, Deliverable 5.3. “Dissemination & Exploitation Report: Dissemination and Exploitation Report; Exploitation Opportunities through Policy Makers”.
WP6 Management and Quality Assurance
The objective of WP6 ”Management and Quality Assurance” was the smooth execution of the project’s overall planning, financial and quality management. The main activities of WP6 was connected with financial project management (controlling) as well as management in content and quality assurance. It also supported and controlled workflow between the partners in order to provide successful implementation of the project as a total.
Under WP6 activities have been organized two successful and inspiring four project meetings in Lappeenranta (13-14.1.2014) Maastricht (13-14.11.2014) Oxford (15-16.10.2015) and Brussels (25-16.10.2016). The final project meeting was conducted in connection with the Euro Commission policy brief (27.10.2016). The Management team has regularly organized Skype meetings amongst partners to discuss ongoing subjects and adjust further actions. Overall, 26 all-partners Skype meetings have been organized during the reporting period. The objectives of the meetings were to coordinate ongoing project activities and plan forthcoming events and deliverables. Project management has ensured the successful communication between partners and organizing the tools and communication needed for the progress of the project through the NQA2.0 portal. Therefore, performed activities ensured the high level of collaboration between partners and resulted in a field work preparation and a successful execution of surveys in three continents (Latin America/Brazil, India, Africa).
The project has proceeded according to the plan. During the project execution some realignment in activities and deliverables schedules have been introduced. No significant modifications in the project content have been made, rather an alignment of work order. All adjustments have been agreed with the Project Officer and did not impact on the overall project outcomes as well as on the schedule.
MNEmerge project activities have had also close cooperation with the sister-project GLOBALVALUE. In particular, joint workshop was organized during the slot at Academy of Management conference on August 6th, 2016, Anaheim, USA. During the 3rd project meeting and UNIDO 50th Anniversary conference Advisory Board meetings were organized (Overall two meetings). During the meetings the project results and findings were presented and discussed. The valuable feedback from advisory board members contributed to the ongoing project activities as well as for planning follow-up measures.
WP6 lasted during the whole project period, originally laid out to be 30 months, however extended to 36 months due to the evaluators’ comments. The leading partner in WP 6 is LUT. The amendment process started during the first reporting period have been successfully finalized in the second period. The reason for these changes was changing of affiliation of key researchers which lead the changes of two partners in project consortia. Consequently, these changes led to some realignment of project schedule but did not impact the overall goals achievement. Reporting outcomes of the WP6 are: Deliverable 6.1. “PM Plan: Project Management Plan, Deliverable 6.2. “Reporting: Contractual financial and progress reports (Interim and final reports); quality management and peer review (AB)”, Deliverable 6.3. “Meetings Minutes: Document each partnership meeting and web conferences”, Deliverable 6.4 “e-Working System: Intranet and web conferencing facilities, e-reporting” and Deliverable 6.5. “IPR Management: Intellectual Property management plan/rules”.

Potential Impact:
During the project, the research team studied the various modes of MNE collaboration with societal stakeholders, which provide an opportunity to run business sustainably and simultaneously ensuring sustainable development of the society. The results of project demonstrate the importance of governmental policies to achieve significant results in poverty reduction.
The project aimed at efficient and thorough dissemination of these outputs as well as wider exploitation to stakeholders and civil society. The project outputs, such as the reports and policy briefings generated in the research WPs, offer support for decision-making at the local, national, UN and EU levels. They are targeted to policy-related outcomes, for instance White Papers, through which the knowledge acquired during the project can be transferred to business community and regional decision-makers.
The effective exploitation of the project results provides an opportunity to continue working with project outcomes also after the project finished. Through wide-ranging and effective dissemination activities, the key stakeholders can be informed of and involved in generating the results, and can also be encouraged to further develop the discovered framework and practical solutions. Thus, through multidisciplinary research and well-planned dissemination activities, the impact of the project culminates into far-sighted regional politics, increased MNE-environment value co-creation, and contribution to the socio-economic development in the Millennium Declaration focus areas.
The aim of the dissemination in the project has been to ensure that the objectives and results of the project are recognized by the relevant target groups, and increase awareness of the MNEmerge project and the Seventh Framework Programme (FP7) of the European Union as the funder of the project. The main target groups for the project’s dissemination include:
1. EU-level, national and regional policy makers
2. Research community
3. Businesses and NGOs
4. General public
All partner organizations have actively participated in dissemination as content providers and through shared responsibilities. The University of Turku has been keeping track of all the dissemination activities of the project, through which the various target groups of the project in different geographical regions have been reached, including several hundreds of EU-level, national and regional policy makers, representatives of businesses and NGOs the research community, and the general public.
As regards the different target groups of the project, MNEmerge has aimed to engage in dialogue with the EU-level, national and regional policy makers in order to present them common challenges and propose policy recommendations, as well as provide networking opportunities. The main dissemination activities targeted for policy makers include project events, in particular regional workshops for national and regional policy makers and policy briefings held at the EU Commission and UNIDO for EU- and UN-level policy makers. For the research community, MNEmerge has presented research findings, supported the related scientific dialogue and further research and provided networking opportunities. This target group has been mainly reached with the number of academic papers and presentations in various conferences, workshop and seminars. By engaging in dialogue with business and NGOs, MNEmerge has presented the common development challenges and proposed best practices, managerial recommendations and guidelines, as well as provided networking opportunities. Again, the various events but also personal contacts, for instance when conducting research interviews, have been the main ways to spread awareness of the MNEmerge project. When it comes to general public, presenting the project and the addressed challenges as well as increasing the awareness of MNEs’ role in sustainable development has been important. The open access publications, as well as the project website, social media presence and media coverage have proved to be the main way to reach the widest possible audience.
Through the MNEmerge website and Facebook page, as well as through the websites of the project partner organizations the project has gained significant visibility in different continents. Various conferences, seminars and workshops organized during the MNEmerge project have been an essential part of the project’s dissemination and exploitation activities, acting as targeted dissemination events for policy makers, representatives of business and NGOs, and the academia. Moreover, the MNEmerge team have been active spokespersons of the project in various occasions, including speeches and presentations in some 60 events, providing an opportunity to reach a wide target audience. In addition, the various project publications have presented project findings both as academic papers for the research community and as several open access publications (e.g. two Baltic Rim Economies Special Issues) for anyone interested in project. Over 2000 flyers and newsletters have been distributed during the project, spreading information about MNEmerge and the news regarding the project’s activities to a wide target audience around the world. Media coverage on MNEmerge has also spread awareness on the project and the challenges it addresses to general public, particularly in the target regions.
The core of dissemination activities include regional workshops, policy briefings, panels and workshops in other conferences. Following the list with description of the main dissemination activities conducted in India, Ghana, Brazil, Mexico, USA and several European countries.
Regional policy workshop Public Health Foundation of India, Gurgaon, India, 21.8.2015
The aim of the workshop was to discuss the research findings of the MNEmerge team together with the relevant stakeholders, such as policy makers and NGOs, as well as to receive feedback from various experts to further strengthen the ongoing study. The main theme of the workshop was to discuss the contribution of pharmaceutical MNEs to facilitating access to medicines in India. In addition, the contribution of MNEs to sanitation, agriculture and poverty alleviation in India was discussed in order to form a more holistic picture of the overall impact of MNEs on the Indian society. The research conducted by PHFI indicated that MNEs have established linkages with the local market in India, which has had positive spillover effects in the overall economy by helping in asset and employment creation. MNEs have also undertaken various CSR initiatives, such as patient access programmes and educational and awareness programmes. However, the investments of MNEs in R&D and innovations have been criticized due to the fact that the research priorities of the firms are not in line with the public health priorities in India.
In general, the lack of sanitation was highlighted as one of the main societal challenges worldwide, having adverse impacts on the lives of millions of people. Consequently, improvement in sanitation could have wide-ranging positive effects to people’s health and quality of life. MNEs can play an active role through CSR related activities in the improvement of sanitation and are already involved in, for instance, the construction of toilets and the provision of clean drinking water. These activities are seen to bring benefits for firms as well, for instance in the form of improved image and strengthened customer loyalty.
Multinational enterprises in Africa: Challenges and options for effective development
CSIR-STEPRI, Accra, Ghana, 10.–11.8.2015
CSIR-STEPRI organized a regional stakeholder workshop to create awareness about the project, and to exchange views with various stakeholders on the contribution of MNEs to Ghana’s socioeconomic development, especially in the areas of employment generation and poverty reduction. The two-day workshop under the theme Multinational enterprises in Africa: Challenges and options for effective development took place at CSIR-STEPRI in Accra, Ghana on the 10th and 11th of August, 2015. The workshop had about 45 participants, including representatives from the government, business community, NGOs, research organizations and the media.
The workshop included presentations on various themes, such as Ghana’s experiences on attracting MNEs, experiences of MNEs on engagement with local firms in Ghana, the role of MNEs in the country’s agricultural sector, and the impact of MNEs on local development and poverty reduction. Furthermore, group discussions were held on the role of African governments in enhancing MNEs’ impacts on economies and on the effectiveness of MNEs in achieving the Millennium Development Goals (MDGs).
The participants of the workshop agreed that the activities of MNEs affect all areas of the MDGs, including eradicating extreme hunger and poverty, achieving universal primary education, reducing child mortality, improving maternal health, combatting HIV/AIDS, malaria and other diseases, promoting gender equality and women empowerment, ensuring environmental sustainability as well as global partnership for development. Furthermore, it was concluded that the African governments take various measures to support MNEs’ contribution to the local socioeconomic development and to the achievement of the MDGs, for instance in terms of creating a legal and regulatory framework and a functional operational environment for the companies. However, further actions should be undertaken for instance to provide support mechanisms for SMEs, as well as to facilitate effective linkages between MNEs and SMEs.
Evolving Regime in Intellectual Property Protection JNU Convention Centre, Delhi, India, 2.–4.11.2015
The Public Health Foundation of India (PHFI) organized a conference on the evolving regime in Intellectual Property Protection in Delhi on November 2–4, 2015, with special focus on MNEs and access to medicine. The conference was organized in cooperation with Jawaharlal Nehru University (JNU), Third World Network Geneva (TWN) and Institute for Studies in Industrial Development (ISID) under the umbrella of the Health Association of India (HEAI).
The role of multinational enterprises in emerging countries Universidade Federal de Santa Catarina, Florianópolis, Brazil, 27.11.2015
The MNEmerge workshop The Role of Multinational Enterprises in Emerging Countries took place on November 27th, 2015 at the Trindade Campus of Universidade Federal de Santa Catarina, Brazil. The topics of the workshop included, among others, the role of energy in improving human life and living standards, and the impact of business environment in attracting multinational enterprises to enter the electricity market. The workshop gathered together representatives from the MNEmerge project, as well as several experts from the business world, academia and various institutions.
The workshop started with a welcome address by representative of the host organization INESC P&D Brasil, and an introduction to the MNEmerge project. The opening speeches were followed by presentations on Agriculture Sector in Brazil, The Impact of Multinational Enterprises in Brazil and South America and The Future of Renewable Energy. After the presentations, the discussions continued at a round table on Sustainable Development and Public Policies in the Energy Sector.
MNEmerge dissemination workshop Department of Commerce, University of Delhi, Delhi, India, 22.2.2016
MNEmerge dissemination workshop was held at the Department of Commerce, the University of Delhi, India on Monday the 22nd of February, 2016. The event was attended by 30 participants who were a mix of students and faculty members of the department.
Discussion during the event triggered many important issues, such as the effects of WTO and organizational interests apart from issues faced by customers from the base of the pyramid (BoP) segment and responsibilities of multinational firms towards serving a segment that has a potential to buy its products. The students that took part in the workshop felt that multinationals have an obligation towards the BoP segment and MNEs should modify their products, packaging and pricing as per the needs of the BoP segment. Simultaneously, students emphasized the need for governments to play an active role in monitoring activities of MNEs and local firms.
The role of Multinational Enterprises and Private Sector in Development Innovation
CSIR-STEPRI, Accra, Ghana, 27.–28.9.2016
The Science and Technology Policy Research Institute of the Council for Scientific and Industrial Research (CSIR-STEPRI) organized the regional policy workshop The role of Multinational Enterprises and Private Sector in Development Innovation as part of Innovation Conference. The Innovation Conference was organized in collaboration with AFRICALICS, GLOBELICS. The event was held on 27–28 September, 2016 at the La Palm Royal Beach Hotel, Accra, Ghana with the theme Development Innovation – Putting the Pieces Together. The conference was organized with the aim of creating a network of innovation practitioners, including scholars, in order to drive innovation research and practice in Ghana and West Africa as a whole. It also aimed at mobilizing champions for innovation from policy institutions, the private sector, academia (research institutions, universities and polytechnics), international and civil society organizations.

The following were the conference’s sub-themes:
• Defining innovation practice in Africa – principles and fundamentals
• The nexus of innovation and entrepreneurship
• Challenges of innovation in developing economies and their antidotes
• Promoting innovation in the key sectors of the economy – what to do and how to do it.

Furthermore, the objective of the conference was to share the findings of the MNEmerge project with the wider audience. All in all, there were 100 participants from research institutions, universities, government ministries, private companies, international organizations and NGOs from Ghana, Burkina Faso, Nigeria, Tanzania, Greece, Denmark, and the USA.

Tracing Pathways to Clean Villages: Uncovering the Nature of “Swachh”
Gujarat Institute of Development Research, Ahmedabad, India, 15.11.2016
The objective of this conference was to present the results of two major but related projects on rural pathways to improve sanitation coverage and its impact on health to a multi-stakeholder forum and get feedback for validation and refinement of the main findings. Both projects are being coordinated by Professor Shyama V. Ramani, of the United Nations University at Maastricht, Netherlands (UNU-MERIT). The first project on Incentivizing the provision of rural sanitation through sustainability audits funded by the National Council for Science & Technology Communication, (NCSTC) of the Department of Science and Technology, Government of India (2015–2016) sought to identify the governance patterns at village level to bring about improvements in access to WAter, efficient WAste management, Sanitation and Hygiene behavior or WASH for SWACHH or Cleanliness. The objective of the second project, MNEmerge, is to examine the system under which WASH status in a country improves – taking India as the case study. A core component is to identify the impact of WASH status on health through a survey of 2000 rural households. Under the two projects six Indian states were covered: Bihar, Maharashtra, Gujarat, Rajasthan, Tamil Nadu and Sikkim.
On November 15th, 2016, the preliminary results were presented to the scientific community, Panchayats (village councils), policy makers and as well as citizens concerned about extensions of our approaches to urban India. The novelty of this conference was the presentation of results to the communities on whom the research was conducted as well as to societal stakeholders in order to get their feedback and discuss future steps. Usually, academic research is only presented to the scientific community, policy makers or at most to the sponsors of the research project.
However, as part of the action-research credo of Professor Ramani, fully supported by UNUMERIT and also followed in Friend In Need India (non-profit founded by her), all project results are validated by those who have been the object of the study as well as other interested societal stakeholders. The conference comprised two parts. The first part addressed the Panchayat heads or village councils of the villages studied, as well as students and academicians, and it was in Hindi and Gujarati. The second part was directed towards a wider audience including state level policy makers, corporate representatives, academics, NGOs and civil society and it was in English.
Marketing, Strategy and Policy - MNEs, Global Development and Sustainable
Development Goals. Manipal University, Jaipur, India, 15.–16.11.2016
The aim of this Special Interest Group (SIG) was to provide a platform for exchange of ideas and push periphery of our current understanding about role of MNEs in development of markets they benefit from and recognize the guidance provided to MNEs through Sustainable Development Goals. Contribution and limitations of multinational firms to development of their target markets were highlighted by bringing together scholars, practitioners and policymakers working in the related areas. Keynote speeches by leading international experts from the field of marketing, technology, management and development were delivered. Stakeholders related to the field of energy, health and sanitation came together with an intention to acknowledge recent trends, consumption patterns, business practices and scope for management from the point of view of social inclusion through social development.
Rural electrification policy and the importance of FDI in developing countries
Technological Center of the Federal University of Santa Catarina, Florianópolis, Brazil,
21.11.2016
Workshop on Rural Electrification Policy and the importance of FDI in Developing Countries took place on the 21st of November, 2016 at the Technological Center of the Federal University of Santa Catarina, Florianopolis, Brazil. The workshop aimed to discuss the results and impact of rural electrification programmes as well as the role of MNEs in such initiatives.
The workshop was opened with welcoming speech by host representative from INESC Brazil, after which presentations were held by local stakeholders and MNEmerge partners. First, the MNEmerge project was presented and key findings and implications regarding MNEs involvement in host country development and contribution to local economy were described. Next, representative of State Secretariat for Agriculture and Fisheries (EPAGRI-SAR) discussed the agricultural development of the region and emphasized the role of electrification. Project member from STEPRI-CSIR presented Ghanaian experience from agriculture and industrial sectors. And finally, representative of Ministry of Mining and Energy presented the results of Light for All programme implementation and outlined further development paths.
The second part of the workshop was devoted to joint discussion facilitated by Professor Rosa. Topics emphasized in the discussion were energy ladder, project framework capturing interconnections between MNEs and local economy, as well as the role of government.
POLICY BRIEFINGS
Directorate-General for Research and Innovation (DG RTD), European Commission
Brussels, Belgium, 27.10.2016
The MNEmerge team presented the policy implications that have arisen from the project’s research results in a policy briefing organized at the Directorate-General for Research and Innovation (DG RTD), European Commission in Brussels, Belgium on the 27th of October, 2016. The policy briefing consisted of presentations and discussions on the research framework and methodology of the MNEmerge project, as well as on policy recommendations resulting from studies on capability building and poverty reduction in different sectors, such as sanitation and healthcare in India, energy and healthcare in Brazil and industry in Ghana. All in all, the policy briefing included lively and fruitful discussions among the project team and the representatives of the DG RTD, resulting in useful suggestions on how to proceed with policy recommendations, and inspiring further research.
United Nations Industrial Development Organization (UNIDO) Vienna, Austria, 24.11.2016
The panel MNE’s impact on global Development challenges in emerging markets was organized at the UNIDO’s 50th Anniversary Conference in Vienna on the 24th of November, 2016. The panel served to present the current findings and recommendations of the research project to the audience, expecting to explore the issues regarding the impact of MNEs on emerging markets, distilling lessons learned from the research and providing policy advice.
MNEMERGE PANELS AND WORKSHOPS IN OTHER CONFERENCES
Workshop “The Impact of MNEs on Global Development Challenges”
The American Marketing Association 2014 Global Marketing SIG Conference “The
Honorable Merchant in International Marketing”, Cancun, Mexico, 16.–18.4.2014.
MNEmerge project was presented at the Honorable Merchant in International Marketing conference (2014 AMA Annual Conference – Global Marketing Special Interest Group) in Mexico in April 2014. The conference included a specific workshop the Impact of MNEs on Global Development Challenges dedicated to the theme of the MNEmerge project. The workshop was led by Dr. Suraksha Gupta from Brunel University.
The participants of the workshop recognized the research area of MNEmerge to be very important and contemporary for international trade, particularly from the multinational enterprises’ point of view. Dr. Gupta’s presentation engaged the audience into discussions about topics that are very relevant to the MNEmerge project. For instance, corruption was raised as an important additional issue that could be addressed by the project. Furthermore, the importance of creating awareness of the activities of MNEs among the poorest population group was brought up by the participants of the workshop. It was recognized that although the poorest population group is well versed in and well informed about the products offered by MNEs and the usage of these products, it is still not known how media can be used to make this population vigilant about the activities of MNEs. As MNEs are reluctant to spend their marketing budgets on creating awareness of people about policing their activities, who is going to work towards creating this kind of awareness?
Panel “Multinationals, Sustainable Development and Poverty Reduction"
European International Business Academy (EIBA) Annual Conference 2015, Rio de Janeiro, Brazil,
2.12.2015
The findings of the MNEmerge project, along with other issues related to the project’s themes, were discussed in a panel session Multinationals, Sustainable Development and Poverty Reduction at the European International Business Academy (EIBA) Annual Conference in Rio de Janeiro, Brazil on the 2nd of December, 2015. The panelists of the session were Godfred Frempong (CSIR-STEPRI, Ghana), Pervez Ghauri (University of Birmingham, UK), Suraksha Gupta (University of Kent, UK), Antti Kosonen (Lappeenranta University of Technology, Finland), Fatima Wang (Kings College London, UK), Bruno Woeran (Lappeenranta University of Technology, Finland), and Juha Väätänen (Lappeenranta University of Technology, Finland). The 41st EIBA Annual Conference was organized at the Pontifical Catholic University of Rio de Janeiro, Brazil on 1–3 December, 2015. The theme for the EIBA 2015 conference was International Business after the BRIC’s Rush.
Professional Development Workshop “MNEs’ Corporate Social Responsibility as
Complementary to National Development” Academy of Management (AoM) Conference, Anaheim, USA, 6.8.2016
The MNEmerge and GLOBAL VALUE projects organized a joint professional development workshop to present the results and discuss about the impacts of MNEs on the global development in the annual Academy of Management conference held on August 5–9, in Anaheim, the USA. The workshop gathered around 40 participants to listen the insights and take part in the lively round table discussions about the impacts of MNEs in sustainable development in the world.
Project findings show that in most cases local firms, linked to MNEs, benefit from MNE presence in a country. The MNEs’ presence particularly influences the capabilities, efficiency and wage levels of local individuals in these industries. The results show that MNEs are willing to share generic type of know-how with local firms but not advanced or high-tech knowledge. It is also notable that MNEs are not particularly interested in sustainable development or poverty reduction in local markets and are more interested to achieve the goals set by their HQs. In most cases, host country government provides incentives to attract FDI. The results also show that the role of host country government in initiating linkages between MNEs and local development is very crucial. Local governments should encourage MNEs to play a role in development and capability enhancement of local firms. They should also discourage monopolistic practices by MNEs and regulate polluting and adverse environmental practices to promote the sustainable and positive socio-economic development in a country. At the firm level, MNEs should focus on the corporate brand and integrate poverty reduction into the corporate agenda. They should also be able to engage their distribution network into CSR initiatives and incorporate capability enhancement into industrial practices. The results show that MNEs can do good for themselves while doing good for sustainable development. Reputational gains can reach not only their target beneficiaries, but far beyond, their mainstream consumers. Well communicated and managed CSR agenda is the key for the sustainable impact and can have a positive influence on consumer perceptions and strengthen consumer purchase intentions.
Workshop “MDGs & Social Development”
Startup to Sustainability: Initiatives and Challenges, New Delhi, India, 4.–5.11.2016
Workshop MDGs & Social Development took place at the 5th Annual International Commerce
Conference Startup to Sustainability: Initiatives and Challenges organized at the Department of Commerce, University of Delhi on November 4–5, 2016. The speakers of the workshop included Suraksha Gupta from the University of Kent, Aashna Mehta from the Public Health Foundation of India and Mahipal Bukya from Manipal University.
Panel “MNEs corporate social responsibility as complementary to national development”
European International Business Academy (EIBA) Annual Conference, Vienna, Austria,
4.12.2016
The MNEmerge team presented the research results of the project at a panel titled MNEs corporate social responsibility as complementary to national development at the European International Business Academy (EIBA) Annual Conference held in Vienna University of Economics and Business in Austria on the 4th of December, 2016. The objectives of the panel, chaired by Professor Juha Väätänen from Lappeenranta University of Technology, included the following questions:
• How far have we come in accomplishing the MDGs/SDGs?
• What has been the role of MNEs in achieving UN Sustainable Development Agenda objectives?
• How can we improve the impact of the collaboration between MNEs and local stakeholders?
To sum up, the various events organized during the MNEmerge project – nine regional workshops, two policy briefings, and five workshops and panels in other conferences – have been an essential part of the project’s dissemination and exploitation activities. Through these events, the various target groups of the project in different geographical regions have been reached, including several hundreds of EU-level, national and regional policy makers, representatives of businesses and NGOs, and the research community. Media coverage on these events has also spread awareness on the MNEmerge project and the challenges it addresses to general public, particularly in the target regions of the project. In addition, the MNEmerge team have been active spokespersons of the project in various occasions (including speeches and presentations in some 50 events).
Consequently, through the various events organized during MNEmerge, the key stakeholders have been informed of and involved in generating the project results, including the research results and policy recommendations resulting from studies on capability building and poverty reduction in different sectors, and have also been encouraged to further develop the discovered framework and practical solutions. The effective exploitation of the project results ensure the continuity of the project outcomes also after the project has finished and through multidisciplinary research and well-planned dissemination activities, the impact of the project can culminate into far-sighted regional politics, increased MNE-environment value co-creation, and contribution to the socio-economic development in the Millennium Declaration and the 2030 Agenda for Sustainable Development focus areas.
To sum up, through the large number of various dissemination activities undertaken by all project partners, the awareness of the MNEmerge project has spread to several thousands of people all over the world. MNEmerge has been able to reach its target audiences (EU-level, national and regional policy makers, research community, business and NGOs, and general public) and transmit the project’s key message that has been related to the research aims: how multinational companies could integrate with and create shared value within their operating environments and how such value-creation could be further promoted. The results of MNEmerge shed on future policies and further actions that can be taken into account all around the world. The project highlighted multiple crucial aspects that need to be considered when trying to achieve the MDGs/SDGs. MNEs are among the main gatekeepers and enablers of sustainable development are the key for a better future with equal opportunities for everyone. The impact of MNEmerge will be seen in the upcoming years when the policy recommendations given for local governments, the EU and the UN are considered and implemented in some form in different parts of the world.

List of Websites:
Project website: https://mnemerge.com/contact/
Contacts:
Project management

Juha Väätänen
Project Director
Lappeenranta University of Technology
juha.vaatanen@lut.fi
Tel. +358 40 526 1518

Roman Teplov
Project Manager
Lappeenranta University of Technology
roman.teplov@lut.fi
Tel. +358 50 448 8071

Dissemination, press and project materials

Hanna Mäkinen
Project Researcher
University of Turku
hasoma@utu.fi
Tel. +358 2 333 9563

Final Report Summary - MNEMERGE (A Framework Model on MNE’s impact on global development challenges in emerging markets)

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