1 Global Trends in Foreign Direct Investment Scale, Developments and Consequences Hafiz Mirza Professor of International Business Bradford School of Management Chief, Development Issues Division on Investment UNCTAD BCIB Launch “ China is a sleeping dragon. Let it sleep, for when it wakes it will shake the world ”. Napoleon
Inward FDI from 1980 to
3 FDI from Emerging accounts for 15% of Global FDI (up from 5% in 1990) Emerging economies account for about 25% of all TNCs In 1990, there were 19 such companies among the Fortune 500; by 2005, the number had risen to 47; and 58 by 2006 State ownership relatively common compared with developed-country counterparts Harbingers of the Future
Economy Hong Kong, China 11' '974 Russian Federation.. 156'824 British Virgin Islands '512 Singapore 7' '580 Taiwan Province of China 30' '910 Brazil 41'044 87'049 China 4'455 73'330 Korea, Republic of 2'301 46'760 South Africa 15'004 43'499 Cayman Islands '395 Mexico 2'672 35'144 Malaysia '830 Chile 1'149 26'787 Argentina 6'057 24'047 Panama 3'876 21'176 Indonesia 86 17'350 India '964 United Arab Emirates 14 11'830 Venezuela 1'221 11'559 Colombia 402 9'960 Source: UNCTAD, FDI/TNC database 4 Top 20 Developing and Transition Economies (Stock of FDI) US$ Billions
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Sovereign Wealth Funds: Top Investment Locations 6
7 International Expansion in Oil, Gas & Minining Oil and gas production of selected TNCs outside their home country, 2005, million barrels of oil equivalent Source: UNCTAD, based on data from IHS 10%+ of Global FDI
8 Foreign Production Locations by Oil & Gas TNCs from Emerging Economies 1995 Source: UNCTAD, based on data from IHS
9 …and in 2005 Source: UNCTAD, based on data from IHS
TNC Involvement in Infrastructure (Billions of US$) 10 10% of Global FDI
Top Infrastructure TNCs 11
Significant Chinese and Indian Infrastructure Investments in Africa 12
TNC Profitability
14 Development Challenges Host-country gov’t Governance, institutions Sectoral policies and institutions TNC-specific policies (entry and operations, contracts, taxation,IIAs) Making FDI work for sustainable development TNC Activities TNCs Abide by local laws Uphold high standards when local governance is weak Home-country gov’t Promote responsible TNC behaviour Assist host countries Int. Community Guidelines Pressure, sanctions Assist host countries Civil society Monitor TNCs and governments Provide expertise
Implications for Research: Sources of Competitive Advantage Firm-Specific Advantages Home Country Advantages Development Process or Stage Advantages Ownership and Access Expertise and Technology (1) Access to Resources and Activities (2) Relative Advantages (3) Product Process & Value Chain Niches Production and Process Technologies (4) Access to Created Access (5) Market Niches (6) Networks and Relationships Business Models (7) Kinship (8) Intra-Developing Country Relations (9) Organisational Structures and Business Culture Forms of Governance (10) Cultural Affinity (11) Institutional Affinity (12) 15