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Financial Foreign Direct Investment: The Role of Private Equity Investments in the Globalization of Firms from Emerging Markets

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  • Tamir Agmon

    (Graduate School of Business)

  • Avi Messica

    (Technology Management Department)

Abstract

and Key Results 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).

Suggested Citation

  • Tamir Agmon & Avi Messica, 2009. "Financial Foreign Direct Investment: The Role of Private Equity Investments in the Globalization of Firms from Emerging Markets," Management International Review, Springer, vol. 49(1), pages 11-26, February.
    • Handle: RePEc:spr:manint:v:49:y:2009:i:1:d:10.1007_s11575-008-0122-9
    DOI: 10.1007/s11575-008-0122-9
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    Cited by:

    1. Lumengo Bonga-Bonga & Ekerete Umoetok, 2016. "The effectiveness of index futures hedging in emerging markets during the crisis period of 2008-2010: Evidence from South Africa," Applied Economics, Taylor & Francis Journals, vol. 48(42), pages 3999-4018, September.
    2. Elitsa R. Banalieva & Ravi Sarathy, 2011. "A Contingency Theory of Internationalization," Management International Review, Springer, vol. 51(5), pages 593-634, October.
    3. S. Veeramani & Abha Shukla & Mariam Jamaleh, 2020. "Financial theories of foreign direct investment: a review of literature," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(2), pages 185-217, June.
    4. Luo, Yadong & Zhang, Huan, 2016. "Emerging Market MNEs: Qualitative Review and Theoretical Directions," Journal of International Management, Elsevier, vol. 22(4), pages 333-350.

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