Outward FDI and the Economic Performance of Emerging Markets

Globerman, Steven; Shapiro, Daniel

doi:10.4337/9781848441460.00023

Cited by 10 publications

(6 citation statements)

References 43 publications

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“…These represent this study's contribution to practice. Although some associate OFDI with capital flight (Andreff, 2002), OFDI also brings significant benefits to the home economy (Zhao et al, 2010;JIM, 2010;Globeram and Shapiro, 2008;Svetlicic and Rojec, 2003) through increased competitiveness, job creation and economic growth. This makes a strong case for policies that can encourage OFDI responsibly.…”

Section: Implications For Policy Makersmentioning

confidence: 99%

“…Thirdly, whilst OFDI can lead to depletion of resources in the home country (Witt and Lewin, 2007), it is also associated with increased home competitiveness (Zhao et al, 2010), country exports and jobs (Kalotay, 2004) and hence economic benefits (JIM, 2010;Globeram and Shapiro, 2008;Svetlicic and Rojec, 2003). Thus, investigating the determinants of OFDI allows us to highlight several implications for policy makers so that OFDI is encouraged responsibly.…”

Section: Introductionmentioning

confidence: 99%

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Extending Dunning's Investment Development Path: The role of home country institutional determinants in explaining outward foreign direct investment

Stoian

2013

International Business Review

114

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Section: Implications For Policy Makersmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Extending Dunning's Investment Development Path: The role of home country institutional determinants in explaining outward foreign direct investment

Stoian

2013

International Business Review

114

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“…The IPE approach suggests that the inward FDI from American firms to LA did not result in the kinds of spillovers that lead to further economic development, as suggested by the investment development path (IDP) proposed by John Dunning (1981). It is understood in the IDP literature that there may be considerable heterogeneity across countries (Dunning and Narula, 1998; Globerman and Shapiro, 2008), including LA (Stal and Cuervo-Cazurra, 2011; Borda Reyes et al , 2019) and Central and Eastern Europe (Stoian, 2013), and that these differences may result in divergent development paths. Our analysis points to the possibility of an interrupted IPD whereby inbound FDI does not result in the spillovers that support the development of domestic MNEs in LA, and more importantly that this may characterize all firms across the region.…”

Section: Discussionmentioning

confidence: 99%

Are Latin American business groups different? An exploratory international political economy perspective

Carney

Estrin

Liang

et al. 2021

MBR

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Purpose This study aims to advance an international political economy (IPE) perspective that geo-political events can have long-lasting imprint effects on countries and their firms. The study also aims to explore the idea that shared political history and geography combine to create specific structural conditions that shape the international competitiveness of all firms in a region. In particular, the authors consider whether the Monroe Doctrine of 1823, which asserted American influence in the Western Hemisphere, contributed to the creation of institutional structures across Latin America (LA) affecting the strategies of all firms to this day. The authors also illustrate the IPE perspective using the example of the contemporary international competitiveness of LA business groups. Design/methodology/approach The authors illustrate the IPE perspective using the example of the contemporary international competitiveness of LA business groups. The exploratory framework of this study leads to a proposition about the export performance of Latin American business group affiliates. The authors use firm-level performance data for 32,000 firms across emerging economies to explore the proposition empirically while controlling for alternative explanations. To do this, the authors draw on the World Bank Economic Surveys. Findings The authors derive a proposition that argues the Monroe Doctrine has had a long-run imprint effect on economic policymaking in LA, resulting in a common, persistent and negative impact on the international competitiveness of firms. The authors find strong and consistent evidence that in terms of export performance, all Latin American firms export less and group affiliates do not outperform independent firms, This finding contrasts with the results for all the other emerging market regions around the world. Research limitations/implications The main contribution of this study has been to suggest the potential importance of shared regional geopolitical history and geography in explaining firm-level outcomes. However, this study is preliminary and introductory, although the authors seek to control for alternative country-specific explanations of the results. The analysis considers the effects of one particular IPE phenomenon, the Monroe Doctrine, in one particular location: LA. Future work should seek to contrast LA with other geopolitical security and alternative IPE structures. They might also address the time dimension from a historical perspective: is imprinting in LA driven by the length of the Monroe Doctrine arrangements? Practical implications The most important managerial learning point concerns the relevance of geography and political economy factors for multinational enterprises strategy formation. There is widespread understanding that context is an important determinant of subsidiaries’ performance, and that strategies need to be constructed to take account of country-specific characteristics, most importantly, in emerging economies and institutional arrangements. This paper proposes that managers also need to take account of IPE structures, including security arrangements, and to consider the resulting regional as well as national context. Social implications The analysis suggests that not only the performance of firms, including emblematic firms, but also the socially beneficial spillovers that might be generated from them, are contingent on the regional as well as national characteristics. Thus, business groups in most emerging economies are found to yield better performance and to provide higher levels of social impact, including concerning ESG goals. However, the findings of this study suggest that the former is not true for LA, which, the authors argue, is a consequence of imprinting as a result of the Monroe Doctrine. Further work is needed to establish whether the latter effect is also not true, but if that is the case, then regionally specific policies may be required to address the resulting corporate social shortfalls. Originality/value The core idea is that geo-political events can have long-lasting imprint effects on countries and their firms: that shared political history and geography create specific structural conditions that shape the international competitiveness of all firms in a region. The authors explore this concept with reference to the Monroe Doctrine, asking whether its assertion of US influence across the Americas contributed to the creation of institutional structures across LA affecting the strategies of all firms to this day.

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“…Especially after the 2000s, different developments started to be seen in this field. Following Buckley et al (2007)'s work published on JIBS, which focused on foreign direct investments of EMNEs to other countries, based on a wide range of empirical data, EMNEs began to become a remarkable field of study in the literature (See Globerman and Shapiro, 2008;Guillen and Garcia-Canal, 2009;Madhok and Keyhani, 2012;Hernandez and Guillen, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

Internationalization Strategies of Emerging-Market Multinational Enterprises: The Case of Investments Made by Yılport Holding in Port Cities in Foreign Countries

et al. 2022

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The literature on internationalization strategies of multinational enterprises traditionally examines the activities and strategies of multinational enterprises originating from developed markets; besides, it is an area that is developing more rapidly with the multiplier effect of globalization processes. However, in recent years, this field has started to attract attention with the increase in foreign direct investments made by multinational enterprises originating from emerging markets to other countries. In this study, it is aimed to understand the contributions that multinational enterprises originating from emerging markets can make to mainstream theories in the field of international business, and to focus on the differences between emerging-market multinational enterprises and developed market multinational enterprises in terms of internationalization strategies. In this context, Yılport Holding, which is a container terminal operator in Turkey, and recently attracted attention with its foreign direct investments in both developed and emerging markets, by being the 11th largest company on a global scale in a very short time, has been examined as a case study. The fact that Yılport Holding, a multinational company originating from the emerging market, has grown rapidly through acquisitions in a very short time, as well as gaining an unexpected advantage in terms of ownership advantage, branding and courage to enter the market, are all in contradiction with traditional internationalization theories. These can be explained as the efforts of multinational enterprises originating from emerging markets to quickly catch up with and surpassing multinational enterprises originating from developed countries by eliminating various disadvantages arising from these markets.

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Outward FDI and the Economic Performance of Emerging Markets

Cited by 10 publications

References 43 publications

Extending Dunning's Investment Development Path: The role of home country institutional determinants in explaining outward foreign direct investment

Extending Dunning's Investment Development Path: The role of home country institutional determinants in explaining outward foreign direct investment

Are Latin American business groups different? An exploratory international political economy perspective

Internationalization Strategies of Emerging-Market Multinational Enterprises: The Case of Investments Made by Yılport Holding in Port Cities in Foreign Countries

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