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1、The Interaction of Foreign Direct Investment with Electronic Commerce in Less Developed CountriesGuilherme D. Pires and they can capture the scale economies of production and marketing on a global scale (Vernon 1979). H
2、e stresses the degree of standardisation as evidence of maturation of the product. As the product reaches maturity in its home market, competition from similar products reduces profit margins of the producer in the home
3、country. LDCs at this stage may offer competitive advantages for manufacturing in the form of lower unit costs. Vernon assumes that standardized products require a significant amount of input of labour, which is relative
4、ly cheaper in LDCs. From this new location the products will be re- exported to the home country. The Investment Development Path (IDP) is based on the eclectic paradigm of Dunning and Narula (1996), that captures the dy
5、namics of FDI but perhaps in a more contemporary framework than foreseen by Vernon (1979). IDP shows countries proceeding through five main stages of development with interacting FDI flows (Fig. 1). Countries can be clas
6、sified according to their propensity to be net outward and/or inward direct investors. This propensity rests on:1. The ownership specific advantages (O) of the indigenous firms of the countries concerned relative to thos
7、e of firms of other countries; 2. The competitiveness of the country specific (L) resources and capabilities of that country relative to those of other countries; and 3. The extent to which indigenous and foreign firms u
8、tilize their (O) specific advantages jointly with the location-bound endowments of home or foreign countries through internalizing the cross-border market for these advantages, which are their perceived internalisation s
9、pecific advantages (I).Stage 1During this stage the L advantages are insufficient to attract inward direct investment. Reasons for this could be limited demand levels because of low per capita income, inappropriate econo
10、mic systems or government policies, inadequate infrastructure, poorly trained labour force. There is very little outward direct investment either, thus companies will only export to and import from these economies.Stage
11、2Inward direct investment rises while outward investment remains virtually non- existent. Countries’ home markets might have grown in purchasing power or size.The interaction of foreign direct investment with electronic
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