Multinational firms and the extractive sectors in the 21st century: Can they drive development?

Historically, extractive sector MNEs have been seen as an obstacle to sustainable development, because they operated in enclaves with limited local engagement. Importsubstitution policies aimed to increase the local benefits of these resources, restricting FDI. Since liberalisation, extractive MNEs have re-engaged with developing countries through looser governance structures with greater potential for linkages. Despite the potential, few host countries have seen meaningful MNE-led development because of weak domestic firms and poor location advantages. New MNEs from emerging economies have not shown a greater propensity to local linkages. Only countries that have continued to invest in location advantages have seen substantial benefits. Acknowledgements: I would like to thank Ana Botella of the University of Valencia for her research assistance and comments on the various drafts. I am also indebted to Grazia Santangelo, Daniel Shapiro, Elisa Giuliani and Lou Anne Barclay for their insightful feedback.