Threat or Opportunity?
- Studies in International Investment series
Edited by Karl P. Sauvant
Chapter 12: Outward FDI and the Economic Performance of Emerging Markets
Steven Globerman and Daniel M. Shapiro INTRODUCTION A fairly substantial literature exists that evaluates the impacts of outward foreign direct investment (OFDI) on home countries.1 The emphasis of the relevant studies has been on OFDI from developed countries, reﬂecting the historic propensity for OFDI to be undertaken by transnational corporations (TNCs) headquartered in those countries. However, OFDI from emerging markets has been growing in both absolute and relative importance in recent years. As a result, researchers and policy makers are paying increasing attention to OFDI by TNCs headquartered in emerging markets, particularly those from Brazil, China, India, and Russia (the so-called BRICs ).2 Nevertheless, there is relatively little published research on the home country impacts of OFDI for emerging economies. Studies for developed home economies focus on a wide range of potential economic impacts of OFDI, including impacts on domestic employment, wages, expenditures on research and development and innovation, trade ﬂows and tax revenues (Kokko 2006). While there is some conﬂicting evidence, the broad conclusion to be drawn from the relevant studies for developed countries is that OFDI is associated with net productivity beneﬁts to the home country that are manifested in higher per capita real income levels.3 The evidence suggests that the productivity beneﬁts of OFDI are achieved primarily through eﬃciency gains tied to the specialization and scale advantages of ﬁrms competing in international markets, and the indirect importation of knowledge and technology through imports and internal spillovers. In this sense, OFDI beneﬁts...
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