Are you ready to have FDI overseas*?—a dilemma question for emerging* economy* multinational *enterprises
Abstract
_Started from the trend of increasing FDI outflows from developing countries, the author established the “5W” framework for the EE MNEs to consider before they make the decision to have outward FDI. _
Introduction:
In past two decades, the emerging economies (EE) have rapid growth in economy. Initially, EE have benefited tremendously from inward FDI. The transferred technology, capital and organization skills from developed economies (DE) boosted EE’s development in various aspects (Luo et al, 2007). After accumulating certain level of capital, human resources and management skills, the MNEs from EE are on the way to start their FDI outflow. FDI outflows from DE still dominate the global business. However, FDI outflows from EE are playing more and more important roles. This research starts from the FDI outflows trend, and then focuses on the conceptual framework for the EE MNEs to decide their internalization objective and strategy. “5W” framework will be used to test whether EE MNEs are really ready to expand their investment in overseas market.
Trends
Figure 1.1 FDI Outflow from 1970-2006, in million US$ (UNCTAD, 2008)
Conceptual Framework
As we can see from the trend, there are more and more FDI outwards from developing countries. Thus, what are the main factors for those MNEs to invest abroad? Are they really ready to go? What factors can facilitate their success in internal market?
In order to answer those questions, “5W” framework is designed for all the firms from EE. Before making the decision to invest abroad, please ask and find following questions for the firm,
Why to have FDI outwards?
When to have FDI outwards?
Where to have FDI outwards?
Who is more suitable to have FDI outwards?
Why to have FDI outwards for EE MNEs?
First question to answer is why? On the other...