Multinational firms in economies in transition and their direct investments abroad

Seminar BRICs - Thursday, February 22

Thursday

February

2018

7:00 pm

The seventh session of the FMSH and EHESS BRICS Seminar (2017-2018) will host Wladimir Andreff (Université Paris 1 Panthéon Sorbonne).

Wladimir Andreff is Professor Emeritus at Paris 1 Panthéon Sorbonne University, Honorary Member of the European Association for Comparative Economic Studies, Honorary President of the International Association of Sports Economists and the European Sports Economics Association, President of the Scientific Council of the Sports Economy Observatory (Ministry of Sports).

This presentation will be based on the article « Multinational companies from transition economies and their outward foreign direct investment », Russian Journal of Economics, 3 (2017), 1-30, written with Madeleine Andreff, retired lecturer, University Paris-Est – Marne la Vallée.

Abstract:
Multinational companies (MNCs) based in 26 post-communist transition economies (PTEs) emerged during the 1990s. Their outward foreign direct investment (OFDI) boomed dramatically from 2000 to 2007 in these countries, and then muddled through the financial crisis and great recession at difference paces on different paths. This difference is revealed in a sample of 15 PTEs for which data are available from 2000 to 2015.
Most of these economies appear to be on the brink of moving from the second to the third stage of Dunning’s investment development path. The geographical distribution of their OFDI favors host countries located in other PTEs, developed market economies, and tax havens while their industrial structure is more concentrated on services rather than on manufacturing and the primary sector. PTE-based MNCs primarily adopt a strategy of
market-seeking OFDI. Econometric testing shows that push factors are major determinants of OFDI. The results demonstrate that OFDI is determined by the home country’s level of economic development, the size of its home market, and its rate of growth as well as technological variables: OFDI decreases with an increase in the number of scientists in the home economy and with an increase in the share of high-tech products in overall exports, exhibiting a negative technological gap. A lagged relationship between OFDI and previous inward FDI suggests that Mathews’ linkage-leverage-learning theory is relevant in the case of PTEs.