Internationalization of developing country firms through outward FDI Main trends and key issues

Case study on outward foreign direct investment by Singaporean firms

Experts noted that the internationalization of developing country firms through OFDI has been increasing.

Driven by the internationalization of the country's oil and gas companies, Russian OFDI is becoming substantial.

OFDI is an important aspect of this consideration and a vehicle for integrating developing country firms into the global economy.

Foreign direct investment

Selected cases of Singapore enterprises revealed that a significant proportion of their revenues and assets were related to OFDI activities. Two thirds of the Singapore firms surveyed confirmed that OFDI had increased their competitiveness.

Losing the Foreign Investment Race

How to Boost Foreign Investment

Foreign direct investment

They should tap into their diasporas, attract foreign direct investment in new areas, and acquire foreign firms if possible.

Countries' liberal foreign exchange has also contributed to OFDI by developing country firms.

The Benefits of Chinese FDI

A significant proportion of OFDI from Singapore, however, originates from Singapore based affiliates of foreign TNCs.

In the case of ASEAN, intraregional FDI accounts for close to one fifth of the total FDI.

The additional risks of investing and operating in a foreign country have hampered OFDI by developing country firms, as have the lack of information on overseas investment opportunities and the lack of access to finance.

Beware of FDI Protectionism

The Government of Brazil has taken a positive approach to OFDI, and President Luiz Inácio Lula da Silva has set a target of 10 Brazilian firms becoming true TNCs by the end of his first term.

Ireland showed the importance of foreign direct investment.

The impact of FDI on development

Emerging FDI from developing countries

Obstacles to OFDI

Foreign direct investment flows can, and should, be encouraged.

Government investment in infrastructure, both alone and in partnership with private firms, will also directly benefit growth and attract larger inflows of foreign investment.

) To the extent that these agreements protect investment and open up industries for FDI, they facilitate OFDI from developing countries.

FDI by SMEs involved evaluation of investment locations based on a set of variables which could be clustered under markets, costs, natural resources, infrastructure framework, policy framework and business promotion and support factors.

The shift of FDI to services

Outward FDI from developing countries

Table 2. FDI outflows as a percentage of gross fixed capital formation in selected economies, 2001 2003a (concluded)

The case of South South FDI

Drivers and motivation of OFDI

One of the reasons for this is that in most Latin American and Caribbean countries, FDI policies focus on attracting large quantities of FDI and do not pay much attention to the nature of FDI.

Luxembourg and Spain, both major recipients of FDI in 2003, received lower FDI inflows last year.

The Expert Meeting will focus on the issues of FDI data compilation and analysis and its role in the formulation of FDI policies from a development perspective.

The country has sought to attract FDI for many years, establishing special economic zones for foreign investment.

Some experts stressed that policies had been traditionally oriented to attract FDI and were not really defined as promoting outward FDI.

Does OFDI increase competitiveness of firms and how could competitiveness from OFDI be measured?

The increase in OFDI from developing country firms is being accompanied by an increase in the number of transnational corporations (TNCs) from developing countries, as has been documented in various UNCTAD publications.

Policy measures that support OFDI 13

OFDI and enterprise competitiveness

The bottom line is that the investment climate for foreign direct investors is becoming less welcoming.

The UNCTAD secretariat introduced the central features of the IPR, starting with the recent trends in foreign direct investment.

The Minister of Investment of Egypt set out the Government's objectives and policies with regard to attracting foreign direct investment.

In industries where no domestic firms are present, policymakers should aim to attract foreign direct investment from the countries being emulated or organize programs for incubating new firms.

Such FDI policies include investment subsidies, tax abatements, and exemptions from domestic regulation and laws.