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1 Nov 2011    Mile Theses
MILE 11, Benjamin Utter


Outward Foreign Direct Investment to the Natural Resource Sectors by Global Public Investors from Emerging Economies: Trends, Causes, Effects

MILE Thesis 2011, authored by Benjamin Utter, under the supervision of Roberto Echandi

Abstract:
Foreign direct investment impacts economies around the world, and it influences the nature of the global economy. Foreign direct investment affects the pattern of business activity around the world, and helps to shape economic growth and development globally. Today the patterns of foreign direct investment are shifting. As a result, dynamics are different. The causes and effects are changing. So far, understanding and responding to theshifting nature of global foreign direct investment has been disjointed. Over the last six years, developing and transition economies have become a significant source of outward foreign direct investment. Outward foreign direct investment allocated towards the natural resource sectors from key emerging economy state-owned enterprises and sovereign wealth funds contributes significantly to the shift and increase in outward foreign direct investment from key emerging economies. This paper seeks to better understand this trend and identify the firm-level causes, and subsequently the economic, geopolitical, and political effects resulting from these causes. Government control, over emerging economy state owned enterprises and sovereign wealth funds, provides specific political ownership advantages that make outward FDI successful. An important cause and effect of this success is international political cooperation.

Outward Foreign Direct Investment to the Natural Resource Sectors by Global Public Investors from Emerging Economies: Trends, Causes, Effects