Emerging economies' multinationals

Purpose - The expansion of South‐North and South‐South foreign direct investment (FDI) reflects the rise of cross‐border capital flows, a distinguishing feature of the contemporary global economy, together with the increasing size and complexity of emerging market multinational corporations. Against this background, in emerging economies, governments have become increasingly aware of the role outward FDI (OFDI) can play as an instrument to deepen the integration into the world economy. The purpose of this paper is to analyze recent trends in OFDI from Brazil and China. Design/methodology/approach - Using annual data for the period 1980‐2006 for both countries, the authors test the investment development path hypothesis, according to which the net outward investment position of a country depends on its level of development. Findings - Results show that both China and Brazil are moving towards the third stage of the path, where domestic firms have acquired ownership and other advantages to go abroad and become leading outward investors. Originality/value - The role of governments, institutions and the characteristics of domestic firms in both countries are considered to be crucial factors in determining the movement along the path.