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"Global since Gold" The Globalisation of Conglomerates: Explaining the Experience from South Africa, 1990 - 2009

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  • Grietjie Verhoef

Abstract

The internationalisation of enterprises is one of the essential ways to strengthen the competitiveness of firms from developing countries (UNCTAD, 2005c: 3). Strong growth in outward foreign direct investment (OFDI) from developing countries has become the distinguishing feature of the twenty-first century. This OFDI flows from state-owned enterprises, sovereign wealth funds (SWF) as well as private enterprises operating as multinational companies from a home base or as free-standing companies. Multinational corporations have commenced activities since the 1960s by moving operations to resource-rich, low-cost labour and capital markets (Wilkins, 1970; 1974; 1988; Jones, 1994; 2005). The first wave of OFDI during the 1960s and 1970s was motivated by efficiency and market-seeking factors. This wave was dominated by firms from Asia and Latin America. A second wave of OFDI followed in the 1980s, led by strategic assetseeking enterprises from Hong Kong, Taiwan, Singapore and South Korea (Dunning et al., 1996; UNCTAD, 2005b: 3s). Since the 1990s China, Brazil, India, Russia (the so-called BRIC countries) Malaysia, Turkey and South Africa are among the countries expected to add significantly to OFDI growth (UNCTAD, 2005c: 4). The flow of investment funds from developed countries was expected, but the reverse trend displayed the emerging capacities in countries and firms outside the core of the international economy, which challenged the dominance of developed countries and companies from developed countries. These developments have prompted several questions: how do developing country firms succeed in entering global markets? Do these firms improve their competitiveness through OFDI? This paper investigates this phenomenon from the experience of South Africa. The emergence of EMNC (Emerging Market Multinational Corporations) prompted extensive analysis and debates about the nature of and motives for EMNCs, but has also led to more in-depth analysis of specific country characteristics and firm-specific reasons for OFDI.

Suggested Citation

  • Grietjie Verhoef, 2011. ""Global since Gold" The Globalisation of Conglomerates: Explaining the Experience from South Africa, 1990 - 2009," Working Papers 238, Economic Research Southern Africa.
  • Handle: RePEc:rza:wpaper:238
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    References listed on IDEAS

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    1. Feinstein,Charles H., 2005. "An Economic History of South Africa," Cambridge Books, Cambridge University Press, number 9780521616416.
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    Keywords

    overseas foreign direct investment internationalisation business history conglomerates competitiveness industrial protection management strategy;

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation
    • N60 - Economic History - - Manufacturing and Construction - - - General, International, or Comparative
    • N67 - Economic History - - Manufacturing and Construction - - - Africa; Oceania
    • N87 - Economic History - - Micro-Business History - - - Africa; Oceania
    • N97 - Economic History - - Regional and Urban History - - - Africa; Oceania
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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