Outward foreign direct investment (OFDI) and knowledge flow in the context of emerging MNEs: Cases from China, India and South Africa

Abstract

The paper explores the factors driving Outward Foreign Direct Investment (OFDI) by Emerging multinational enterprisess (EMNEs) and the patterns of knowledge transfer in six cases of EMNEs from three BRICS’ economies (India, China and South Africa). It found that there are significant differences between the OFDI from EMNEs and Developed multinational enterprise (DMNEs), which cannot be explained by using traditional FDI models. The way that EMNEs enter and operate in developed and developing countries are different. Knowledge transfers between EMNEs and developing host economies are predominantly one way and the former transfers more technology and knowledge than they gain. In the case of EMNEs and developed host economies, the knowledge and technology transfers appears to be more evenly matched, a two-way street benefitting both parties. The paper makes two major contributions: (i) it attempts to identify and distinguish the factors driving OFDI and patterns of knowledge transfer of OFDI from EMNEs and shows how they differ from DMNEs; (ii) it highlights aspects of OFDI by EMNEs such as expansion into countries outside their respective regions, and different patterns of technology and knowledge transfer in the South and North respectively.