Financial foreign direct investment: the role of private equity investments in the globalization of firms from emerging markets

Tamir Agmon, Avi Messica

Research output: Contribution to journalArticlepeer-review

9 Scopus citations

Abstract

One major change in the world of international business and finance is the growing role of private equity investments in firms in emerging markets. In little more then four years, since 2003, the money raised by international, primarily American private equity funds for investment in emerging markets went up about ten times, from $3.5B to $35B. This paper provides a multidimensional analysis and discussion on the role of private equity funds in the globalization process of firms from emerging markets. The discussion begins with development economics, focusing on financial markets development and sector specific capital, proceeds to a discussion of local comparative advantage and intangible trade costs in the process of globalization, and continues with a discussion of imperfect contracts and financial contracting based on recent research in financial economics. The multidimensional character of the research is congruent with the nature of globalization and international business. Investment of private equity funds in emerging markets is shown as a new form of foreign direct investment dubbed FFDI (financial foreign direct investment).

Original languageEnglish
Pages (from-to)11-26
Number of pages16
JournalManagement International Review
Volume49
Issue number1
DOIs
StatePublished - 1 Feb 2009
Externally publishedYes

Keywords

  • Emerging markets
  • FDI
  • Financial markets development
  • Globalization

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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