Abstract
The article is aimed at understanding the dynamics and consequences of technology-driven foreign direct investments, undertaken predominantly with the aim of accessing and learning to master technologies by Emerging Market Multinational Enterprises (EMNEs) in Europe, with a particular focus on India and China. The results are grounded on a database, which contains all the investment deals by EMNEs in the EU between 2003 and 2011. It shows that agglomeration economies play a key role in attracting investments from emerging economies, which tend to concentrate in areas with a massive presence of firms in the same industries.
Highlights
Since the turn of the century, we have witnessed unprecedented international growth of foreign direct investments (FDI) by emerging economy multinational enterprises (EMNEs)
Do these investments imply a loss of technological competitive edge in the European firms when they are acquired by EMNEs? Do we observe systematic asset stripping strategies? Or, on the contrary, such investments can create mutual benefits both for the investors and for the economies and the firms they invest in?
Do international investment agreements and national policies influence the impact of EMNEs investments? Can trade authorities minimize the negative impact and strengthen the positive consequences of such investments? What can be learned from the empirical evidence so far?
Summary
When we consider all the investment by emerging economies in Europe, China, and India are clearly the most important investors, closely followed by Russia (Figure 1). 29 percent of all inward investments from emerging countries into Europe come from India and around 21 percent from China.. 29 percent of all inward investments from emerging countries into Europe come from India and around 21 percent from China.3 Their investments are strategically targeted to certain countries and sectors. In terms of countries of destination, UK is the most important destination, followed by Germany and at some distance by France, Spain, and The Netherlands. Chinese firms mainly invest in manufacturing sectors like electronics, industrial machinery, communication, and the automotive industry, while Indian MNEs invest in service industries and in the pharmaceutical sector
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