Over the past decade, firms from a number of emerging markets have become major investors abroad, complementing their home countries’ traditional role as recipients of foreign direct investment (FDI) from developed economies. In 2018, approximately 45% of global FDI outflows came from developing countries. This is the largest share ever recorded, and reflects the steadily growing importance of emerging market enterprises (EMEs) in the global economy (Figure 1).
Figure 1 Developing and transition economies: FDI outflows, and share in world outflows, (UNCTAD, 2018).
While outward investment by EMEs is not a new phenomenon, the magnitude it has reached in recent years is unprecedented, as is the diversity of industries in which such investment is occurring. Moreover, while flows of FDI from developing and transition economies may represent a minority (though a large minority) share among worldwide FDI flows, in some recipient countries – particularly least developed countries – FDI from developing and transition economies can be a major if not dominant source of foreign investment, making EMEs key players at the individual country level.
These evolving patterns of capital flows raise a number of issues for EMEs, as well as for the host and home countries trying to identify and implement appropriate policies to combat the challenges and harness the opportunities such new global players present for sustainable development. In particular, although much of the existing research has been devoted to studying the rising financial and profit hotspots in emerging markets, relatively little attention has been paid to understanding whether and how these new global players are impacting development outcomes in their host countries, or how policies and tools in host countries, in home countries, and/or at the international level, can shape those outcomes.
In 2007, as outward investment from emerging markets was just starting to take off, the Columbia Center on Sustainable Investment founded the Emerging Market Global Players (EMGP) project to better understand these EMEs. For more than 10 years, the EMGP project has been gathering, compiling, distilling, and distributing information on EMEs that is not otherwise publicly available. The EMGP Project involves researchers on FDI from leading private sector, government, and academic institutions in emerging markets who prepare reports on the top outward-investing multinationals from each participating country. To date, reports have been published on 17 economies: Argentina, Brazil, Chile, Colombia, China, Hungary, India, Israel, Mexico, Poland, Russia, Slovenia, South Africa, South Korea, Taiwan, Turkey, and the United Arab Emirates.
Using a standard methodology, this unique global network of researchers gathers such information as:
- how many assets are held,
- employees employed at home and abroad,
- sectors and industries of operation,
- gender composition of boards of directors and management,
- degree of state ownership,
- opportunities and challenges relating to overseas investment, and
- home country policies regarding promotion of outward investment.
Importantly, these reports also uncover barriers to corporate transparency and consequent difficulties in understanding the reach and impact of firms – particularly privately held firms.
With this blog series, we aim to do two things: One: we aim to expand the EME research and policy network, providing a virtual platform on which an interdisciplinary network of global academics, policy makers, civil society organizations, and others can share their work and stay up to date cutting edge research, policy developments, and issues related to emerging market firms – their activities, impacts, factors shaping those impacts, and ways and why the operations and impacts of EMEs may differ from those of developed country firms.
Two: We aim to improve understanding of the relationship between EMEs and sustainable development, and to strengthen the contributions that those firms make to the SDGs. This blog seeks to encourage the study, debate, and open conversations regarding the current and continued role that EMEs (and multinational enterprises more generally) do, can and should play in our ever-growing global world.
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