This paper aims to introduce economic history as a new stream of international business (IB) research. It offers a long-term perspective on how the IB has evolved over time, focussing on the interplay between multinational enterprise and the nation state.
The paper uses existing scholarly literature on international economic history to develop eight key propositions regarding the interface between the politics and economics of foreign direct investment (FDI).
There is a rivalry between nation states and competition between firms. These two forms of conflict interact. Nations use their leading firms as instruments of international policy while leading firms rely on political and financial support from home nations. Using historical evidence and cross-country comparisons, the paper explains has the scale and scope in IB activity have changed dramatically over time.
There is scope for more detailed historical studies on national policies towards inward and outward FDI.
It is important to see the recent international economic policies of China in a long-run historical perspective and to appreciate the similarities between its policies and those of other countries in the past.
Many of the potential economic gains generated by FDI may be lost through an excessive commitment of resources to the pursuit of military power as a foundation for international political power.
This paper challenges IB researchers to widen their horizons.
