Five-Diamond International Conference Cycle
Background

After a decade of rapid growth, multinational companies from emerging markets are passing through a period of change and uncertainty. In the previous thirty years, global foreign direct investment (FDI) flows went from a meager $50 billion to about $1.83 trillion (by 2007), becoming a major factor in the integration process of the world economy. Sales associated with this investment are estimated at about $25 trillion, nearly twice world exports. The rise of outward foreign direct investment (OFDI) from emerging markets, mainly the BRIC countries (32% of total emerging market OFDI), has partly driven this growth. Historically, annual OFDI from emerging market countries averaged less than 10% of the world total, but they have increased at an impressive pace during the 2000s, reaching $253 billion (14%) by 2007. Multinational companies from the BRIC countries are leading players in this process; they have given a new contour to the global investment map.

The transnationalization of emerging market companies is, however, facing new challenges. Global FDI flows are estimated to have fallen by over 21% ($1.45 trillion) in 2008, and are likely to fall farther in 2009. While emerging markets have been relatively resilient, the readjustment of the international economy and the evolution of emerging markets' reality are directly influencing the transnationalization process. What are the impacts of the economic slowdown on the expansion, performance, and role of emerging market multinationals?

The transnationalization of emerging market companies raises important issues, such as:

FIRMS While the drop in global demand and the financial turmoil present major challenges to emerging market MNEs, cheap assets on sale in many countries and the troubles of established competitors in many sectors also herald new opportunities. Will multinationals from emerging economies be able to resist the pressures and improve their standing? What now drives their transnationalization process and what strategies are firms pursuing to maximize their efforts to deliver goods and services to foreign markets through direct investment? In particular, what internal and external obstacles do firms face when transnationalizing, and what can their experiences tell us about overcoming those obstacles?

HOME COUNTRIES Many emerging market governments restrict outward FDI and, in any event, often have no clear policy in this area (in contrast to inward FDI where virtually all countries have an enabling framework in place to attract investment). What experiences have emerging markets and developed countries had in developing their outward FDI policies? How is the current downturn influencing home country environments with respect to outward FDI?

HOST COUNTRIES Global players from emerging markets are creating tension in host countries in both developed and developing regions. Even though many host governments welcome crossborder inflows in a time of decreasing capital investment, the overcompetitive environment in many sectors results in calls for investment protectionism. What do such reactions mean for the transnationalization of emerging market firms? What policy developments are likely in the near future?