Threat or Opportunity?
Studies in International Investment series
Edited by Karl P. Sauvant
Chapter 2: The Rise of TNCs from Emerging Markets: The Global Context
Jeﬀrey D. Sachs I would like to frame a few of the broader global conditions in which this topic will proceed in substance for some time to come. I want to give a kind of macroeconomic overview, and a very brief one indeed, rather than a microeconomic assessment of the particular issues of outward foreign direct investment (FDI) from emerging markets. There is little doubt that, barring a catastrophe, we are living in an age that will be marked by the biggest economic change in the history of recent centuries. It will have, in its geopolitical impact, a role comparable to that of the Industrial Revolution, which is one of the great ruptures of history. We are now living in the age of convergence of economic performance, after several centuries of divergence. Since around 1500, the North Atlantic economies – for a lot of very complicated economic, political and military reasons – rose in dominance over the course of 450 years, so that, by the middle of the twentieth century, the shared dominance of the United States and Europe completely deﬁned the global economic reality. Of course, the Cold War was the dominant survival issue for the world, but the dominant economic issue was the unprecedented concentration of economic power in the North Atlantic economies, and all that it meant for society, technology, culture and so on. The rise of the North Atlantic countries was a long process. It was most fundamentally made powerful by the discovery of trade routes...