2013 Chapters (Layout Features)
Russian Multinationals: From Regional Supremacy to Global Lead: Forward
Traditionally, multinational enterprises headquartered in the developed countries have been the principal actors in the world foreign direct investment market; until not so long ago, they accounted for some 90 per cent of outflows of such investments. They certainly continue to hold the leadership role. But firms headquartered in other parts of the world increasingly challenge multinational enterprises from these countries, as the former invest more and more abroad as well (Sauvant et al. 2010). In fact, with an average of over US$300 billion of outflows during 2008-2009, the amount that over 20,000 emerging market multinational enterprises invested abroad on average during those years was six times the world average of foreign direct investment flows during the first half of the 1980s. The stock of this investment, located in host countries throughout the world, had risen to a staggering US$3 trillion by 2009 and continues to grow. In other words, multinational enterprises from emerging markets have become full and important players in the world foreign direct investment market.
One of the most important new emerging home countries is the Russian Federation. Starting virtually from scratch only some 20 years ago, the stock of Russia's outward foreign direct investment had reached US$250 billion in 2009, with flows averaging US$50 billion during 2008-2009. While most of this investment is in natural resources - and certainly while most of the country's leading multinational enterprises are in this sector - a growing number of Russian firms in other sectors also seek to establish themselves abroad. Like their competitors headquartered in developed countries, they have to overcome a range of issues related to the 'liability of foreignness' (foreigners operating in a foreign country), ranging from how to enter foreign markets (with understanding how to execute mergers and acquisitions successfully being a particular challenge), to managing integrated international production networks, to dealing with political and other obstacles in host countries (including the apparent rise of foreign direct investment protectionism).
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More About This Work
- Academic Units
- Vale Columbia Center on Sustainable International Investment
- Published Here
- February 16, 2017