Emerging economies

Abstract

Chapter 22 notes the growing attraction of emerging economies as host locations for foreign direct investment (FDI). While acquisitions are generally the favored mode of FDI into developed-economy markets, cooperative forms allowing for local participation, such as joint ventures, have been more prevalent in emerging economies, often due to the mandatory requirements of host governments. Emerging economies are distinctive environments for MNEs partnering with local firms, and this can give rise to certain challenges. One is a conflict of objectives held by MNEs and their emerging economy alliance partner(s), with the latter prioritizing defensive and developmental needs. Additionally, the number of multinationals from emerging economy firms (EMNEs) has grown substantially, often internationalizing through alliances with developed economy MNEs as well as with firms in other emerging economies.