Outward FDI From Emerging Markets: Some Policy Issues

Outward foreign direct investment (OFDI) from emerging markets (essentially all non-OECD countries) has risen considerably during the past decade, reaching $133 billion in 2005, for a stock of some $1.4 trillion. As in the case of developed countries, the bulk of this investment is accounted for by a limited number of economies, with ten of them responsible for 83% in 2005. An increasing number of emerging market firms are joining the rank of multinational enterprises (MNEs), i.e. firms controlling assets abroad. This development raises at least two policy-oriented questions: 1. How should the policy regime for OFDI from emerging markets look like to support the competitiveness of the firms involved and the performance of their home countries? 2. How to manage the public reaction in emerging markets to their OFDI and in host countries to inward FDI from emerging markets