Home government policies for outward FDI from emerging economies: lessons from Asia

Abstract

Purpose -The purpose of this paper is to examine the drivers of outward foreign direct investment (OFDI) from the emerging economies and if there exists a positive role for home governments to coordinate them. The backdrop is the recent increases in OFDI from emerging economies and the emergence of several emerging economy firms, which have caught up to become global leaders in several industries. The paper focuses particularly on experiences from Asian economies. Design/methodology/approach -The paper applies a multi method approach and relies on literature studies, investment statistics, government reports, press reports, company reports, and interviews with public officials. Findings -Extending the motive-based business theory, the paper first establishes the pronouncement of a third wave of OFDI from the mid-1990s. Whereas the typical motives have remained important, the technology-seeking motive has become significantly more important during the third wave. Typical policy prescriptions to liberalize government regulations have been called into question. Many home emerging country governments have acted to coordinate their activities by regulating proactively investment outflows. The evidence also shows that the successful investment outflows have benefited significantly from home governments addressing the characteristics and motives of target industries and locations abroad. Practical implications -The analysis shows that contrary to mainstream prescriptions many home governments have successfully regulated strongly OFDI from the emerging economies. However, it is important for home governments to consider the broader interest of promoting capital flows to ensure the long-term development of economies rather than narrow national interests. Home and host governments should seek to establish common and specific collaboration platforms to raise information flows and coordinate better the negotiations and execution of investment projects. Originality/value -The paper provides a more thorough analysis of the implications for home country policies of the increasing outward investment flows from emerging economies and the increasing competitiveness and capabilities of their transnational firms. It proposes augmentations to prior frameworks of drivers and motives of OFDI and pushes deeper the home policy implications of increasing outward investment flows.

Uma proposta de arcabouço teórico para análise do comportamento dos investimentos diretos estrangeiros em economias emergentes

“…Os investimentos outward conferem inúmeras vantagens para todos os membros que participam da cadeia de investimento global, seja ele o país sede das multinacionais, seja o país hospedeiro, sejam as empresas multinacionais e domésticas envolvidas ou os setores envolvidos nas internacionalizações (Apergis, 2009;Baer&Sirohi, 2013;Chen et al, 2012;Chow, 2012;Davies (2013) ;Globerman, 2012;Herzer, 2010;Kahanidra, 2013;Ketkar, 2014;Lee, 2010;Qiang, 2013;Quer et al, 2011;Radlo & Sass, 2012;Rasiah et al, 2010).…”

“…Grande parte dos estudos sobre investimentos diretos estrangeiros (IDE) foi realizada por pesquisadores que deram enfoque em aspectos macroeconômicos e microeconômicos de "economias desenvolvidas", com o intuito de compreender seus determinantes (Chow, 2012;Goldstein, Gammeltoft & Pradhan, 2010;Goldstein & Pusterla, 2010;Herzer, 2010;Ju, Kim, Bae & Know 2012;Quer, Claver & Rienda, 2011;Rasiah, Gammeltoft & Jiang, 2010). Porém, ultimamente, o fluxo de investimentos diretos das economias emergentes vem crescendo continuamente.…”

“…Dentre os benefícios, pode-se destacar o aumento de competitividade das firmas locais, transferência de conhecimento, transferência de tecnologia, network com fornecedores e operadores logísticos a nível mundial, acesso à mão de obra qualificada, acesso à mão de obra barata, acesso a mercados financeiros globais, entre outros (Apergis, 2009;Baer & Sirohi, 2013;Chen, Hsu & Wang, 2012;Chow, 2012;Davies, 2013;Globerman, 2012;Herzer, 2010;Ketkar, 2014;Kahanidra, 2013;Lee, 2010;Quer et al, 2011;Qiang, 2013;Radlo & Sass, 2012;Rasiah et al, 2010).…”

Foreign Direct Investment from Emerging Economies: Determinants and Strategies

“…Faria and Mauro (2009) argue that the GDP per capita, the financial development, the human capital, the economic openness and the governance indicators are positive and relevant for the countries' foreign capital structures, while the natural resources were significant but presenting a negative correlation with the OFDI. Some other empirical evidences from structural changes boosting the outward FDI from developing countries are the governmental regulations to promote outward FDI in China (Rasiah et al, 2010) and the reforms in the Brazilian industry during the 1990s, related to a wider economic openness and the privatization of firms and services (Arbix, 2010) have been also tested and have presented significant effects.…”

Entry Mode Issues in the Internationalisation of South African Retailing

“…This may require home and host country interventions to streamline trade policies and regulation. Rasiah, Gammeltoft and Jiang (2010) have emphasised the role of government in this regard.…”