BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 26/2013:
Investing abroad from the bottom of the productivity ladder – BRICS multinationals in Europe
Marco Sanfilippo ()
Abstract: This paper analyses differences in total factor
productivity and other competitiveness indicators of emerging
multinationals (EMNEs) from Brazil, Russia, India, China and South Africa
(BRICS) against their counterparts from developed countries and domestic
MNEs. The current literature suggests that early internationalisation
strategies by EMNEs are characterised by a lack of experience in diverse
economic and cultural contexts and are explicitly driven by
asset-exploration strategies. If true, this should translate into
significant differences in performance, especially when they invest in
developed countries. Based on a large database on foreign affiliates in
Europe, results find EMNEs at the bottom of the productivity ladder, with a
productivity gap around 20-30 percentage points compared to more
established competitors. Moreover, the paper points to high heterogeneity
among EMNEs that affects their relative performance according to their
current levels of productivity or to differences in their sectorial and
geographic patterns.
Keywords: emerging market multinationals; total factor productivity; foreign direct investment; (follow links to similar papers)
JEL-Codes: F21; F23; (follow links to similar papers)
31 pages, October 2, 2013
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