The Rise of Emerging Market Multinationals: Economic and Business Challenges Ahead

Abstract

Foreign direct investment (FDI) has expanded at a rapid pace. In 2007, the outward stock of world FDI totaled over US$15.5 trillion, up roughly US$12 trillion from the 1997 stock of US$3.7 trillion (UNCTAD 2009). Much of this growth has come from multinational enterprises (MNEs) based in developed countries members of the Organisation for Economic Co-operation and Development (OECD). But FDI from developed countries is no longer the only significant source of FDI. Emerging market MNEs (any corporation with headquarters located in an emerging market and affiliates elsewhere) have contributed a rising share to world outward FDI (OFDI). In 2007, FDI flows from Brazil, China, India, Mexico, and Russia made up roughly 5% of the world’s OFDI flows. In 1997, the same figure was only 2% (ibid.).1 By 2017, we might see this share rise above 10%, and perhaps reach 15%.