Digital multinationals for engaging foreign direct investments in digital economy

Abstract

There has been a trend towards digitalization in all areas of life, including the economic sphere, for a last decade. More and more countries are becoming oriented towards the development of digital economy and digitalization of foreign economic activities. The role of foreign direct investment (FDI) in boosting the digital economy is analyzed in this article. Digital multinational enterprises play the main role in FDI attraction. The development of multinationals is characterized by a new round of transition to the digital economy, which is changing the way of doing business and orienting businesses towards the accretion and use of digital platforms, technologies, solutions and related products and services. Digital multinationals began to enter foreign markets with little to no investment in physical assets. The ratio of the share of foreign sales to the corresponding share of foreign assets (FDI lightness index) for the top-100 digital multinationals in digital solutions segment is raising. Foreign direct investment (FDI) is a catalyst for the digital economy. Nevertheless, governments trying to create favorable environment in the country for FDI attraction should be guided by strategic rather than tactical national interests. States should favor investment in digital economy with goal-oriented approach. Investment policies must resonate with the country’s competitive advantages – human capital, business ecosystem, technological capabilities. ASEAN case is explored in this article.