Describe some ways in which emerging economies have benefited as a result of foreign direct investment in their countries by multinational enterprises.
Multinational enterprises (MNEs) have played a major role in the development of so called 'transition' or 'emerging economies' through foreign direct investment (FDI) in those economies. MNE's, often with their home base in Europe, the USA or Japan have invested in the large emerging economies like Brazil, Russia, India and China as well as in so called second tier economies like Indonesia, Vietnam, Columbia and the Ukraine.
This FDI has consisted of two main types:
- Acquisitions in which the MNE attains shares of a local company and control of its assets and markets are transferred to the new parent, and
- Investment in green field sites where a company builds latest factories, offices and other facilities and gives all equipment and some of the senior staff but recruits other staff within the host country.