Global Players from Emerging Markets: Strengthening ... - Unctad
Global Players from Emerging Markets: Strengthening ... - Unctad
Global Players from Emerging Markets: Strengthening ... - Unctad
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technologies and R&D, and production facilities.<br />
Other implications on enterprise competitiveness<br />
relate to the increase in the value of firms because<br />
of international exposure, improved image and<br />
experience in sophisticated markets. However, the<br />
impact on competitiveness is difficult to assess<br />
because of the lack of information. The analysis is<br />
based on limited case studies, which often do not<br />
include SMEs. It would be worth deepening research<br />
and analysis in this area.<br />
There are undesirable effects or risks of<br />
internationalization. They include business failures,<br />
the loss of capital or closure and the takeover by foreign<br />
firms. The lack of knowledge and misperception<br />
about foreign regulatory framework including legal<br />
issues, unfamiliar business environment, languages<br />
and customs contribute to augment such risks. Given<br />
existing risks, a prudent and gradual approach to<br />
CHAPTER I 9<br />
Box 1. Enterprise internationalization through OFDI: Selected policy recommendations<br />
To the extent that OFDI contributes to improving enterprise competitiveness, developing countries<br />
should support the internationalization of their enterprises and adopt appropriate policies. Various policy<br />
suggestions were made at the Expert Group Meeting on “Enhancing the Productive Capacity of Developing<br />
Country Firms through Internationalization”. They include the following:<br />
�� Ensure coherent and targeted government policies to support the long-term vision for<br />
internationalization of firms and to move to higher value added, knowledge-based activities and<br />
expand a pool of competitive and efficient local enterprises.<br />
�� Build institutional support to facilitate and encourage OFDI, including improved access to finance.<br />
Market entry can also be facilitated through matching of joint venture partners and provision of<br />
industrial parks.<br />
�� Consideration should be given to the different levels of economic development of home countries<br />
and a need for a differentiated approach to different types of SMEs (active vs. passive investors).<br />
�� Establish effective public-private sector dialogue to exchange information and facilitate policy<br />
discussion.<br />
�� International organizations such as UNCTAD could help address the issue of data limitation and data<br />
collection, framing the arguments of what is meant by OFDI, and assisting in institutional support,<br />
policy advice and capacity building.<br />
�� Develop a “<strong>Global</strong> or Regional <strong>Players</strong> Programme” to allow firms and countries to share experiences<br />
on enterprise internationalization.<br />
�� Provide training courses on internationalization for policymakers and managers of developing<br />
country enterprises, including events that would help raise awareness of the benefits of enterprise<br />
internationalization. This could help countries to understand that OFDI is a micro instrument, which<br />
helps firms to increase competitiveness and to be integrated in the global economy, rather than as an<br />
unpatriotic development.<br />
�� Mitigate risks of internationalization by ensuring that developing country enterprises are better<br />
prepared for the challenges.<br />
Source: Report of the Expert Meeting on “Enhancing the Productive Capacity of Developing Country Firms through<br />
Internationalization”, Geneva, 5-7 December 2005 (TD/B/COM.3/EM.26/3).<br />
internationalization would be wise. Companies should<br />
have strong economic fundamentals before attempting<br />
expansion abroad and develop a sound business<br />
model and strategy. The use of risk assessments, the<br />
exchange of experiences, and provision of policy<br />
and institutional support are important to cushion<br />
any negative impact. Home country Governments<br />
should tailor OFDI policies to the needs of their<br />
firms, with special support measures for SMEs. The<br />
private sector could also provide support, facilitating<br />
the exchange of experience and carrying out capacity<br />
building activities through industry clubs and business<br />
associations.<br />
OFDI has desirable and undesirable effects<br />
Governments wishing to promote enterprise<br />
competitiveness through OFDI should weigh its<br />
potential costs against its benefits to their economies<br />
and enterprises, and should then determine appropriate