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New Voices in Investment: How Emerging Market Multinationals Decide Where, Why, and Why Not to Invest

Gonzalo Varela's picture

Emerging market multinationals (EMMs) have become increasingly salient players in global markets. In 2013, one out of every three dollars invested abroad originated from multinationals in emerging economies.

Up until now, we have had a limited understanding of the characteristics, motivations, and strategies of these firms. Why do EMMs decide to invest abroad? In which markets do they concentrate their investments and why? And how do their strategies and needs compare to those of traditional multinationals from developed countries?

In a book we will launch tomorrow at the World Bank, “New Voices in Investment,” we address these questions using a World Bank and UNIDO-funded survey of 713 firms from four emerging economies: Brazil, India, Korea, and South Africa.

At the Heart of the Matter: Improved Market Access to Food Supplies

Bill Gain's picture
Hi-Las workers weighing and sizing mangoes. Source -

At the Ninth WTO Ministerial Conference held in Bali on December 2013, all WTO members reached an agreement on trade facilitation and a compromise on food security issues, a contentious topic which had previously stalled talks during the 2008 Doha Development Round. The “Bali Package,” as it came to be known, was quickly heralded as an important milestone, reaffirming the legitimacy of multilateral trade negotiations while simultaneously recognizing the significant development benefits of reducing the time and costs to trade.

Seven months after the Bali Ministerial Conference, however, the Trade Facilitation Agreement (TFA) has yet to be ratified as India is concerned that insufficient attention has been given to the issue of food subsidies and the stockpiling of grains. India maintains that agreements on the food security issue must be in concert with the TFA.
 
Despite the current impasse in implementing the Bali decisions, the food security concern at the heart of the matter sheds light on the importance of improving the agribusiness supply chains of developing countries to ensure maximum efficiencies. Consider the fact that in 2014, farmers will produce approximately 2.5 billion tons of food. Yet, 1.3 billion tons are lost or wasted each year between farm and fork, while 805 million people suffer from chronic hunger.

How to De-Enclave the African Resource Sector for More Inclusive Growth and Development

Ken Opalo's picture
Oil drums in Ethiopia. Source - 10b travelling

The recent acceleration in growth rates across much of sub-Saharan Africa may not be purely commodity-driven, but for many of the region’s economies macro-economic stability is still dependent on prudent management of natural resources. For this reason, a strategic shift is required to shield African economies from commodity boom-burst cycles.
 
For much of the last half century, the dominant political economy model of natural resource management in Africa was this: states received royalties from mostly private mining companies and then were supposed to invest in public goods such as roads, hospitals, and schools. Private mining companies, for their part, would pick up the slack whenever states failed. Most of the time this happened through corporate social responsibility (CSR) initiatives, as a way of buying the social license needed to operate in specific communities.
 
This model has proven to be a complete failure in nearly all resource-rich African states, for a number of reasons.
 

Notes From the Field: Using Trade Diagnostics to Identify Opportunity in Burkina Faso

Miles McKenna's picture
Members of the Cooperative Agriculture Maraicher for Boulbi, nurture their fields of vegetables, as they water and hoe the fields on November 8, 2013 in Kieryaghin village, Burkina Faso. Source - Dominic Chavez/World Bank

Editor's Note: "Notes From the Field" is an occasional feature where we let World Bank Group professionals conducting interesting trade-related projects around the globe explain some of the challenges and triumphs of their day-to-day work. The views expressed here are personal and should not be attributed to the World Bank Group. All interviews have been edited for clarity.

The interview below was conducted with Mariam Diop, a Senior Economist with the World Bank Group. Mariam is based in the country office in Ouagadougou, the capital of Burkina Faso, where she carries out work in the WBG’s new Macro and Fiscal Management Global Practice. Mariam has been deeply involved with the country’s Diagnostic Trade Integration Studies (DTIS), which has helped to identify a number of key restraints on economic growth and shared prosperity in Burkina Faso. The Trade Post spoke with Mariam about what brought her to the country, where she sees opportunities, and how the DTIS has helped on the ground.
 

Trade and Development Leaders Discuss the Benefits of Global Value Chains

Julia Oliver's picture

Airplane engine. Photo - Doug Zwick/Flickr Creative Commons license.A business processing center in Riyadh that is run by women.

An e-commerce company that helps farmers develop transport companies to deliver packages to remote, rural areas of China.

An airplane engine designed in Turkey, constructed in North America, and used all over the world.

Each of these innovations emerged from a modern trend in trade – global value chains – that was the subject of discussion Friday at “Transforming World Trade: Global Value Chains and Development,” a flagship event of the Annual Meetings hosted by the World Bank Group and the International Monetary Fund. At issue: what are the implications of this trend for poverty and development?

The panelists included World Bank Group President Jim Yong Kim, World Trade Organization (WTO) Director-General Roberto Azevêdo, General Electric Company Vice Chairman John Rice, and Colombian Minister of Finance and Public Credit Mauricio Cárdenas.  Anabel Gonzalez, Senior Director of the World Bank Group’s Trade and Competitiveness Global Practice, moderated the discussion. The vantage points ranged widely, but all panelists seemed to agree: Global value chains hold promise for the poor.

On the Strength of Avocados and Airplane Parts: Making Global Value Chains Work for Development

Daria Taglioni's picture

Also available in: Español

In Chile, producers incorporated procedures that increased the quality of their avocados, thereby increasing their profit margins. Photo - Kristina/Flickr Creative Commons License.By now, developing countries are exporting parts and components used in some of the most sophisticated products on the planet. With the rise of global value chains (GVCs), workers in these countries are no longer just assembling imported parts for local sale, as has been done for decades. They are now participants in international production networks – in factories that cross borders.
 
This change is significant for economic development, as we argue in our forthcoming book, “Making Global Value Chains Work for Development.” GVCs will also be the subject of a discussion by World Bank Group President Dr. Jim Yong Kim, World Trade Organization Director-General Roberto Azevêdo, General Electric Vice Chairman John G. Rice, and Colombia Minister of Finance and Public Credit Mauricio Cárdenas -- and moderated by World Bank Trade and Competitiveness Senior Director Anabel González -- on Friday at “Transforming World Trade: Global Value Chains and Development,” a flagship event of the World Bank-IMF Annual Meetings.

Power Pools: How Cross-Border Trade in Electricity Can Help Meet Development Goals

Michael Pollitt's picture

Power lines strecth over water. Source - DCCXLIXFor nearly three-fifths of the world population, the lack of access to energy is a major challenge to economic development and poverty reduction.

Increasing cross-border trade in electricity can play a major role in helping overcome these challenges. Trade in electricity can help bring down energy prices, mitigate against power shocks, relieve shortages, facilitate decarbonization and provide incentives for market extension and integration.

Yet, countries have been reluctant to trade electricity across borders. Global exports of electricity are currently around 3 percent of total production. This is an anomaly in the energy sector. Think of oil. Roughly 64 percent of all oil produced is traded between countries.

A recent working paper published by the World Bank looks at the institutional arrangements of regional power pools in both developing regions and those in developed countries. In understanding how the regional integration of electricity markets has developed, the paper is able to draw useful lessons for the promotion of future trade arrangements.
 

The WTO Environmental Goods Agreement: Why Even A Small Step Forward Is a Good Step

Miles McKenna's picture

Will the WTO be the first global organization to take action on climate change? Source - VerticalarrayInternational trade has a critical role to play in environmental protection and the effort to mitigate climate change. While it certainly isn’t always framed this way, it is important to realize that increased trade and economic growth are not necessarily incompatible with a cleaner environment and a healthier climate.

If we are going to move away from dirty fossil fuels and inefficient energy processes at a rate necessary to limit the likely devastating results of a warmer planet, then we need enabling policies in place—especially when it comes to trade policy.

That’s why, this week, a group of 14 World Trade Organization (WTO) Members are meeting to begin the second round of negotiations on the Environmental Goods Agreement (EGA)—an effort aimed at liberalizing trade in products that help make our world cleaner and greener.
 

Helping Small Business To Be an Engine of Growth and Employment

Anabel Gonzalez's picture

Man arranging bananas by the road. Malita, Davao City, Philippines. Photo - Kate Bacungco / World BankIn developing countries, small businesses employ a disproportionate share of the population: SMEs comprise two-thirds of formal private sector employment in emerging markets and create 95 percent of jobs in low income countries. They take many forms, from mobile food vendor to technology firm, and they can be incubators of creativity. But, as studies have shown, on average, they account for a smaller share of productivity growth than large firms.

This week I am in Kigali, Rwanda, to participate in the World Export Development Forum. Its theme is: “SMEs: creating jobs through trade.” At this forum, government and business leaders will discuss the role of SMEs in international trade and strategies for increasing their participation. I will speak about the work the World Bank Group is doing to help improve the conditions for SME competitiveness and their integration into the global economy.

Haïti : de l’impact positif des échanges sur le redressement du pays et son essor économique

Calvin Djiofack Zebaze's picture

A busy Haitian market. Source - Glenda PowersL’horizon semble se dégager pour Haïti, qui poursuit son redressement depuis le séisme dévastateur de 2010. Et cela, grâce (en partie) au commerce extérieur.
 
Les autorités haïtiennes le savent qui s’emploient, avec le Groupe de la Banque mondiale et d'autres donateurs, à identifier les obstacles aux échanges pour les démanteler et doper ainsi les secteurs exportateurs.
 
Au début du mois, une équipe de la Banque mondiale s’est rendue à Port-au-Prince pour une semaine de travail avec les principaux acteurs, publics et privés, de la logistique commerciale du pays, notamment des représentants du ministère du Commerce et de l'Industrie. L’objectif ? Discuter de solutions pour renforcer le programme de facilitation des échanges du pays, financé par un fonds fiduciaire multidonateurs conçu pour aider les pays en développement à renforcer leur potentiel économique et à lutter contre la pauvreté grâce au commerce.
 

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