In late 1996, Toyota began to look at the whole of western Europe for a site for its ultra-modern plant. Belgium, the Czech Republic, France, Germany, Poland and the UK all seemed to be the most promising investment recipient, but the list was quickly left a head-to-head battle between Europe's oldest foreign investment rivals - France and the United Kingdom. At first, the UK seemed the obvious choice. Toyota had its only European car assembly plant at Burnaston, in the UK's Midlands, where a skilled workforce and well-established automotive infrastructure and cluster of related firms are available. However, at the end of January, company president Hiroshi Okuda voiced doubts about investing in the UK because of its hesitation to fully participate in the European monetary system. In 1997, Toyota finally announced plans to build a $660 million car plant in Valenciennes, 60 km from Lille, France.
1. The reasons for French government to invite Toyota to invest in France are attributed to the benefits of foreign direct investment (FDI) to France as the host country.
a. Resource-transfer effect
Toyota can make positive contribution to French economy by supplying capital, technology, and management resources that would otherwise not be available and thus boost Frenchfs economic growth rate.
Toyota, as a multinational enterprise (MNE), because of its large size, reputation, and financial strength, has access to financial resources which may not be available for French local firms like Renault or Peugeot-Citroen. These financial resources can be originated from Toyotafs internally-generated cash, or from capital markets. As a reputable and financially strong company, it may be easier for Toyota to have access to such resources than French local companies do.
Technology plays important role in economic growth of a country, since it can stimulate economic development and industrialization.... [continues]
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