Phenomenon of Direct Investments that are not Associated with "Classic" TNCs

80
DOI: 10.20542/0131-2227-2022-66-1-91-99
Moscow State Institute of International Relations (MGIMO-University), 76, Prosp. Vernadskogo, Moscow, 119454, Russian Federation.

Received 30.08.2021.

Acknowledgments. The reported study was funded by RFBR, project number 20-114-50033 («Phenomenon of direct investments that are not associated with “classic” TNCs»).


Abstract. The article is devoted to the review of current scientific research on foreign direct investment (FDI), which is not related to “classical” TNCs. It is shown that a separate study of “born global” firms from TNCs is required mainly because of the need to adjust the theoretical concepts that explain the phenomenon of TNCs. The separate study of FDI of sovereign investment funds and investors in foreign real estate is useful mainly due to the applied tasks of state regulation of such investments. Non-standard FDI can also include investments by pseudo-TNCs, with round-tripping FDI through offshore and similar jurisdictions, as well as FDI by private equity funds. At the same time, pseudo-TNCs and private equity funds can be studied within the framework of the established paradigm of TNCs analysis. Therefore, relatively small amount of publications are devoted to such topics. The majority of publications on non-typical FDI appeared only in the 2000s, which illustrates the blurring of the usual boundaries of FDI. Russian scientists are still focused on studying TNCs. This is partly due to the fact that a new direction has also emerged in such analysis – the study of TNCs from developing and post-socialist countries, which are often difficult to attribute to “classic” Western multinational investors. In this aspect, Russian and generally post-Soviet TNCs turned out to be interesting material for analysis at least in the first 10–15 years of the 21st century. However, the analysis of new FDI players is important for Russia for a number of reasons: 1) creating comfortable conditions for the import of capital to Russia while respecting national interests (FDI of sovereign funds, especially Chinese and Arab); 2) encouraging forms of capital export that contribute to improving the position of Russia in the international division of labor (primarily FDI in modern industries of small “born global” firms); 3) limiting excessive capital exports (FDI of pseudo-TNCs and individuals).

Keywords: foreign direct investment, sovereign wealth funds, foreign direct investment in real estate, “born global” firms


REFERENCES

  1. World Investment Report 2021: Investing in Sustainable Recovery. Geneva, United Nations, 2021. 279 p.
  2. Ramamurti R. New Players in FDI: Sovereign Wealth Funds, Private Equity, and Emerging Market Multinationals. The Future of Foreign Direct Investment and the Multinational Enterprise Research in Global Strategic Management, 2011, vol. 15, pp. 137-165. DOI: http://dx.doi.org/10.1108/S1064-4857(2011)0000015012  
  3. Johanson J., Vahlne J.-E. The Internationalization Process of the Firm – A Model of Knowledge Development and Increasing Foreign Market Commitment. Journal of International Business Studies, 1977, vol. 8, no. 1, pp. 23-32.
  4. OECD Benchmark Definition of Foreign Direct Investment. 2008. Paris, OECD, 2008. 254 p.
  5. Øyna S., Alon I. A Review of Born Globals. International Studies of Management & Organization, 2018, vol. 48, no. 2, pp. 157-180. DOI: 10.1080/00208825.2018.1443737
  6. Rennie M. Born Global. McKinsey Quarterly, 1993, vol. 4, Autumn, pp. 45-52.
  7. Oviatt B. M., McDougall P.Ph. Toward a Theory of International New Ventures. Journal of International Business Studies, 1994, vol. 25, no. 1, pp. 45-64.
  8. Zahra Sh.A. A Theory of International New Ventures: A Decade of Research. Journal of International Business Studies, 2005, vol. 36, no. 1, pp. 20-28.
  9. Cavusgil S. T., Knight G. The Born Global Firm: An Entrepreneurial and Capabilities Perspective on Early and Rapid Internationalization. Journal of International Business Studies, 2015, vol. 46, no. 1, pp. 3-16. DOI: https://doi.org/10.1057/jibs.2014.62   
  10. Goncalves M., Smith E. C. Lusophone-African SME Internationalization: A Case for Born Global and International Joint Ventures. Journal of Transnational Management, 2019, vol. 24, no. 3, pp. 231-258. DOI: 10.1080/15475778.2019.1634406
  11. Lopez L.E., Kundu S.K., Ciravegna L. Born Global or Born Regional? Evidence from an Exploratory Study in the Costa Rican Software Industry. Journal of International Business Studies, 2009, vol. 40, no. 7, pp. 1228-1238. DOI: 10.1057/ jibs.2008.69
  12. Oviatt B.M., McDougall P.Ph. Toward a Theory of International New Venture. Decade Award Winning Article. Journal of International Business Studies, 2005, vol. 36, pp. 29-41.
  13. Baum M., Schwens Ch., Kabst R. A Typology of International New Ventures: Empirical Evidence from High-Technology Industries. Journal of Small Business Management, 2011, vol. 49, no. 3, pp. 305-330.
  14. Oviatt B.M., McDougall P.Ph. Challenges for Internationalization Process Theory: The Case of International New Ventures. MIR: Management International Review, 1997, vol. 37, no. 2, pp. 85-99.
  15. Varma S. Born Global Acquirers from Indian IT: an Exploratory Case Study. International Journal of Emerging Markets, 2011, vol. 6, no. 4, pp. 351-368. DOI: 10.1108/17468801111170356
  16. Vissaka T., Zhang X. Guanxi’s Changing Nature: A Chinese Born Global’s Experience. Journal of East-West Business, 2016, vol. 22, no. 4, pp. 270-295. DOI: http://dx.doi.org/10.1080/10669868.2016.1215661  
  17. Varma S., Nayyar R., Bansal V. What Drives Precocity? A Study of Indian Technology-Intensive Firms. Journal of East- West Business, 2016, vol. 22, no. 4, pp. 242-269. DOI: 10.1080/10669868.2016.1217724
  18. Hagen B., Zucchella A. Born Global or Born to Run? The Long-Term Growth of Born Global Firms. MIR: Management International Review, 2014, vol. 54, no. 4, pp. 497-525.
  19. Hashai N. Sequencing the Expansion of Geographic Scope and Foreign Operations by “Born Global” Firms. Journal of International Business Studies, 2011, vol. 42, no. 8, pp. 995-1015.
  20. Almor T., Tarba Y., Margalit A. Maturing, Technology-Based, Born-Global Companies: Surviving Through Mergers and Acquisitions. MIR: Management International Review, 2014, vol. 54, no. 4, pp. 421-444.
  21. Terjesen S., O’Gorman C., Acs Z.J. Intermediated Mode of Internationalization: New Software Ventures in Ireland and India. Entrepreneurship and Regional Development, 2008, vol. 20, no. 1, pp. 89-109. DOI: 10.1080/08985620701630946
  22. Vissak T., Zhang X. A Born Global’s Radical, Gradual and Nonlinear Internationalization: A Case from Belarus. Journal of East European Management Studies, 2016, vol. 21, no. 2, pp. 209-230. DOI: 10.1688/JEEMS-2016-Vissak
  23. Mihailova I., Shirokova G., Laine I. New Venture Internationalization from an Emergent Market: Unexpected Findings from Russia. Journal of East-West Business, 2015, vol. 21, no. 4, pp. 257-291. DOI: 10.1080/10669868.2015.1067276
  24. Chebanov S. Sovereign Wealth Funds: Is It a New Phenomenon of World Economy? Mirovaya ekonomika i mezhdunarodnye otnosheniya, 2008, no. 10, pp. 12-22. (In Russ.) Available at: https://doi.org/10.20542/0131-2227-2008-10-12-22  
  25. Chebanov S. Sovereign Wealth Funds: Post-Crisis Trends. Mirovaya ekonomika i mezhdunarodnye otnosheniya, 2018, vol. 62, no. 12, pp. 15-25. (In Russ.) Available at: https://doi.org/10.20542/0131-2227-2018-62-12-15-25  
  26. Ramamurti R. Impact of the Crisis on New FDI Players: Past, Present and Future of Sovereign Wealth Funds, Private Equity and Emerging Market Transnational Corporations. Transnational Corporations, 2011, vol. 20, no. 1, pp. 39-68.
  27. Murtinu S., Scalera V.G. Sovereign Wealth Funds’ Internationalization Strategies: The Use of Investment Vehicles. Journal of International Management, 2016, vol. 22, no. 3, pp. 249-264. DOI: https://doi.org/10.1016/j.intman.2016.03.003  
  28. Fotak V., Gao X., Megginson W.L. A Financial Force to be Reckoned With? An Overview of Sovereign Wealth Funds. ECGI Finance Working Paper, 2016, no. 476, pp. 1-48.
  29. Reddy K.S. Pot the Ball? Sovereign Wealth Funds’ Outward FDI in Times of Global Financial Market Turbulence: A Yield Institutions-Based View. Central Bank Review, 2019, vol. 19, pp. 129-139. DOI: https://doi.org/10.1016/j.cbrev.2019.08.003  
  30. Mohan T.T.R. Sovereign Wealth Funds: Western Fears. Economic and Political Weekly, 2008, vol. 43, no. 15, pp. 8-12.
  31. Hamida W.B. Sovereign FDI and International Investment Agreements: Questions Relating to the Qualification of Sovereign Entities and the Admission of their Investments under Investment Agreements. The Law and Practice of International Courts and Tribunals, 2010, vol. 9, pp. 17-36.
  32. Sauvant K.P., Govitrikar V.P., Davies K., eds. MNEs from Emerging Markets: New Players in the World FDI Market. New York, VCC, 2011. 420 p. Available at: https://ccsi.columbia.edu/sites/default/files/content/docs/publications/EMGP_-_eBook_PDF_2_11.pdf (accessed 20.09.2021).
  33. Eid F. Private Equity Finance as a Growth Engine: What It Means for Emerging Markets. Business Economics, 2006, July, pp. 7-22.
  34. Kalotay K. Indirect FDI. The Journal of World Investment & Trade, 2012, vol. 13, pp. 542-555.
  35. Kuznetsov A.V. Direct investment from Russia abroad: changes since 2018. Social Sciences and Contemporary World, 2021, no. 1, pp. 5-15. (In Russ.) DOI: 10.31857/S086904990013992-3
  36. Khodov L.G. Acquisition of real estate abroad as a direction of capital export. Voprosy Ekonomiki, 2000, no. 2, pp. 46-53. (In Russ.)
  37. Seitkaliev R. Foreign direct investment of Russians with second citizenship or residence permit. Mirovaya ekonomika i mezhdunarodnye otnosheniya, 2015, no. 7, pp. 63-71. (In Russ.) Available at: https://doi.org/10.20542/0131-2227-2015-7-63-71  
  38. Khodov L.G. Russian private capital in foreign residential real estate. Economic Horizons, 2020, no. 2, pp. 80-85. (In Russ.)
  39. Leontieva L.V. Foreign direct investment in commercial real estate in the United States. Vector of Economics, 2020, no. 11. (In Russ.) Available at: http://www.vectoreconomy.ru/images/publications/2020/11/worldeconomy/Leontyeva.pdf (accessed 20.09.2021).
  40. Volgina N.A. Russian capital in Latvia: trends and perspectives. Vestnik RUDN: International Relations, 2015, vol. 15, no. 2, pp. 126-134. (In Engl.) Available at: http://journals.rudn.ru/international-relations/article/view/10745/10196 (accessed 20.09.2021).
  41. Samartcev V. Benefits and challenges of Chinese FDI in USA. Mirovaya ekonomika i mezhdunarodnye otnosheniya, 2014, no. 10, pp. 57-71. (In Russ.) Available at: https://doi.org/10.20542/0131-2227-2014-10-57-71
  42. Sirmans C.F., Worzala E. International Direct Real Estate Investment: A Review of the Literature. Urban Studies, 2003, vol. 40, no. 5-6, pp. 1081-1114.
  43. Holsapple E.J., Ozawa T., Olienyk J. Foreign “Direct” and “Portfolio” Investment in Real Estate: An Eclectic Paradigm. Journal of Real Estate Portfolio Management, 2006, no. 1, pp. 37-47. DOI: 10.1080/10835547.2006.12089735
  44. Anop S. Determinants of Foreign Direct Investment in Real Estate in European Countries – Panel Data Analysis. 17th ERES Conference Proceedings, Milan, 2010. Available at: https://www.diva-portal.org/smash/get/diva2:500976/FULLTEXT01.pdf (accessed 20.09.2021).
  45. Kim H.M. International Real Estate Investment and Urban Development: An Analysis of Korean Activities in Hanoi, Vietnam. Land Use Policy, 2020, vol. 94, May, p. 104486. DOI: https://doi.org/10.1016/j.landusepol.2020.104486  
  46. Fereidouni H.Gh., Al-mulali U. The Interaction between Tourism and FDI in Real Estate in OECD Countries. Current Issues in Tourism, 2012, pp. 1-9. DOI: 10.1080/13683500.2012.733359
  47. He C., Wang J., Cheng Sh. What Attracts Foreign Direct Investment in China’s Real Estate Development? The Annals of Regional Science, 2011, vol. 46, pp. 267-293.
  48. Joghee Sh., Alzoubi H.M., Dubey A.R. Decisions Effectiveness of FDI Investment Biases at Real Estate Industry: Empirical Evidence from Dubai Smart City Projects. International Journal of Scientific & Technology Research, 2020, vol. 9, no. 3. Available at: https://www.researchgate.net/profile/Haitham-M-Alzoubi/publication/340460709_Decisions_Effectiveness_of_FDI_Investment_Biases_at_Real_Estate_Industry_Empirical_Evidence_from_Dubai_Smart_City_Projects/links/5e8c372ca6fdcca789fbfaef/Decisions-Effectiveness-of-FDI-Investment-Biases-at-Real-Estate-Industry-Empirical-Evidence-from-Dubai-Smart-City-Projects.pdf (accessed 20.09.2021).
  49. Moshirian F., Pham T. Determinants of US Investment in Real Estate Abroad. Journal of Multinational Financial Management, 2000, vol. 10, pp. 63-72.
  50. Adair A., Berry J., McGreal S., Sýkora L., Parsa A.Gh., Redding B. Globalization of Real Estate Markets in Central Europe. European Planning Studies, 1999, vol. 7, no. 3, pp. 295-305.
  51. De Verteuil G., Manley D. Overseas Investment into London: Imprint, Impact and Pied-à-terre Urbanism. Environment and Planning A, 2017, vol. 49, no. 6, pp. 1308-1323. DOI: https://doi.org/10.1177/0308518X17694361
  52. Haila A. Real Estate in Global Cities: Singapore and Hong Kong as Property States. Urban Studies, 2000, vol. 37, no. 12, pp. 2241-2256. DOI: https://doi.org/10.1080/00420980020002797  
  53. Optimization of investment ties of modern Russia. Moscow, IMEMO, 2016. 120 p. (In Russ.) DOI: 10.20542/978-5-9535-0479-9

Registered in System SCIENCE INDEX

For citation:
Kuznetsov A. Phenomenon of Direct Investments that are not Associated with "Classic" TNCs . World Eonomy and International Relations, 2022, vol. 66, no. 1, pp. 91-99. https://doi.org/10.20542/0131-2227-2022-66-1-91-99



Comments (0)

No comments

Add comment







Indexed

 

 

 

 

Dear authors! Please note that in the VAK List of peer-reviewed scientific journals, in which the main scientific results of dissertations for the degree of candidate and doctor of sciences should be published for the “MEMO Journal” the following specialties are recorded:
economic sciences:
5.2.5. World Economy.
5.2.1. Economic Theory
5.2.3. Regional and Branch Economics
political sciences:
5.5.4. International Relations
5.5.1. History and Theory of Politics
5.5.2. Political Institutions, Processes, Technologies

 

Current Issue
2024, vol. 68, No. 7
Topical Themes of the Issue:
  • The Supporting Structure of Global Security
  • Institutional Features of the Fourth Energy Transition
  • The Evolution of Modern German Christian Democracy
  • The Monarchies of the Persian Gulf and Central Asia
Submit an Article
INVITATION FOR PUBLICATION
The Editorial Board invites authors to write analytical articles on the following topics:
  • changes in the processes of globalization in modern conditions
  • formation of the new world order
  • shifts in civilization at the stage of transition to a digital society

The editors are also interested in publishing synthesis articles / scientific reviews revealing the main trends in the development of certain regions of the world - Latin America, Africa, South Asia, etc.