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The Rise of Transnational Corporations from Emerging Markets

The Rise of Transnational Corporations from Emerging Markets

Threat or Opportunity?

Studies in International Investment series

Edited by Karl P. Sauvant

This insightful book shows that foreign direct investment (FDI) from emerging markets has grown from negligible amounts in the early 1980s to $210 billion in 2007, with the stock of investment now being well over $1 trillion. This reflects the rise of firms from these economies to become important players in the world FDI market. The contributors to this book comprehensively analyze the rise of emerging market TNCs, the salient features of the transnational activities of these firms, the relationship of outward FDI and the competitiveness of the firms involved, their impact on host and home countries and implications for the international law and policy system.

Chapter 9: Who’s Afraid of Emerging-Market TNCs? Or: Are Developing Countries Missing Something in the Globalization Debate?

Andrea Goldstein

Subjects: business and management, international business


Andrea Goldstein INTRODUCTION This chapter discusses the consequences of South-to-North FDI flows for OECD governments and firms. Emerging-market transnational corporations (TNCs) from non-OECD countries wish – and indeed need – to establish a direct presence in OECD countries to develop new resources and capabilities.1 Their rise introduces a wide range of new issues in the policy debate in OECD countries. These include the importance of nationality in determining corporate behavior, the adaptability of non-OECD investors to the policy environment and the informal norms that characterize business in OECD countries, and the consequences for national security. The current wave of globalization is characterized by the unprecedented international scope of distribution systems and markets for goods and services, capital, labor and technology (Feenstra and Hamilton 2006). Yet the rising interdependence of national economies poses challenges to national sovereignty and, somehow paradoxically, opens the door to protectionism, possibly more in the investment than on the trade front. In Europe, in the first five months of 2006, the governments of France, Italy, Poland, and Spain sought to check takeover bids by German (E.On), Italian (ENEL, Unicredit) and Spanish (Abertis) companies, while Korean politicians described foreign investors as ‘vultures’. Still, if recent developments provide any guidance, TNCs from non-OECD countries are particularly exposed to the risk of the ‘selective globalization syndrome’ (Gross 2006), which makes globalization opportunities available à la carte (that is, according to demand) or prix fixe (that is, with constraints) depending on who orders the menu.2 Public opinion is sensitive to an investor’s nationality. In...

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