Direct Investments Abroad

Abstract

The rise of ‘Third World multinationals’ has attracted some attention in recent literature.¹ According to the data at hand, a much broader range of developing countries is exporting this form of technology than any other. Almost every Latin American country, and a large number of Asian countries, are the homes of enterprises with some direct investment abroad (no doubt some African enterprises have joined in). While some of the data on developing country capital exports are difficult to construe as the export of local technology — tax havens like Panama, Bermuda and the Bahamas in Latin America and Hong Kong in Asia, seem to be large conduits for capital channelled by developed countries — it is clear that a considerable number of developing country enterprises have developed some source of competitive advantage that enables them to set up and successfully operate affiliates abroad.