Since the nineteenth century multinationals have discovered and exploited world resources, created transportation and information infrastructures, and moved production processes across borders. They have built and rebuilt the webs of the global economy. This chapter reviews the historical evidence on the long-run impact of multinationals on their host economies. The past provides rich and compelling data, but because multinationals have such a long and heterogeneous history, it also cautions against overgeneralization. It will be shown that multinationals have often served as 'engines of growth', but that negative outcomes have also been evident. This empirical evidence also needs to be framed within the wider context. The spread of multinationals since the nineteenth century has coincided both with an extraordinary growth in world incomes, and with the growing gap between the rich and the poor, the North and the South.
As earlier chapters showed, in the nineteenth century and the interwar years, the majority of multinational investment was located in the developing world, especially Latin America and Asia, primarily in natural resource and services. Box 10.1 provides the only available estimates of the distribution of FDI by host economy.
These figures provide at best orders of magnitude—Wilkins is unable to quantify her ranking in 1914—but they make three important points. Firstly, multinational investment has never been randomly scattered around the globe, but has clustered in certain locations. Secondly, the United States, Canada, Britain, and Germany were among the world's largest host economies even in the period when the largest share of FDI went to developing countries. Thirdly, it is striking that a number of developing economies, including Brazil, India, and China, have been at various times major recipients of FDI, yet they have remained poor countries.
The shift of FDI to the developed world after World War II, and the reasons for it, were reviewed in Chapter 2 . By 1960 the world's three largest hosts were Canada (24 percent of the world total), the United States (14 percent) and the United Kingdom (9 percent)