Advances in Economics and Business 5(5): 256-264, 2017 http://www.hrpub.org
DOI: 10.13189/aeb.2017.050503
"Emerging" through Foreign Investment: Investment
Development Path Estimation of "MINT" Economies
Emine Beyza Satoglu
Management and Global Business Department, Rutgers Business School, Rutgers University, USA
Copyright©2017 by authors, all rights reserved. Authors agree that this article remains permanently open access under the
terms of the Creative Commons Attribution License 4.0 International License
Abstract This article aims to analyze the relationship
between the foreign investment, both inward and outward,
and the development levels of the emerging market
economies: Mexico, Indonesia, Nigeria and Turkey (MINT).
Dunning's IDP (Investment Development Path) theory has
been used as the basis for empirical analysis covering the
recent globalization era: 1990-2013. The fixed effects
longitudinal data analysis for the four countries
demonstrated that MINT economies are at the 2
nd
stage of
IDP. At the same time, increasing level of inward FDI flows
into these countries prove the potential of these economies to
be represented as "second generation of fast growing
developing countries" after the BRICS. Thus, this study aims
to improve our understanding on the emerging economies by
focusing on a new group (MINT) and it demonstrates the
interaction of inward/outward FDI and the GDP growth in
that group of countries.
Keywords Investment Development Path,
Outward/Inward Foreign Direct Investment, Emerging
Economies, MINT
1. Introduction
The transformations after the Second World War toward
liberalization, deregulation and market system gave rise to
the internationalization of the firms, but nothing could be
more significant for the globalization of markets than the
advances in communication, transportation and technologies
boosted in the last two decades. In recent globalization era,
the number of the countries and regions benefiting from the
advantages of internationalization has expanded sharply. As
a result, the level of the Foreign Direct Investment has
reached very high levels in all around the world both in
developed and developing countries. According to
UNCTAD reports [1], global FDI flows have risen to $1.76
trillion in 2015. Similarly, the share of FDI flows into
developing countries has reached 45% of global inflows that
emphasizes the striking importance of the emerging
economies for hosting FDI in recent world. On the other
hand FDI outflows from developing countries, which has
also reached a record level in 2014, is continued to expand in
2015. In 2015, 28% of global FDI outflows have been
invested by the developing countries, while it was only 12%
at the beginning of the 2000s. [1]
Under the lights of the trends in foreign investment levels,
exploring the rise of the share of the developing countries
within the total FDI flows has become a new research
interest, particularly in the IB field. However, to date,
research on the developing countries has still been scarce.
The studies that have already been carried out are often of
limited to BRICS (Brazil, Russia, India, China, and South
Africa) countries or focus on limited time horizon. Similarly,
while several studies analyzes the motivations of FDI
inflows to developing countries, the key role of both outward
and inward investment for the development of the
late-industrializer "emerging” economies has not yet well
understood. In this regard, the main purpose of this study is
to expand our understanding on the emerging economies'
development story through an extended time span that would
enable us to explore the patterns of development in an
interdependent world during the entire years after the
globalization of markets in the 1990s. In addition, in this
study an unvisited country group that will possibly be
accepted as 'the second generation giants of emerging
economies' is examined in order to discuss homogeneity or
heterogeneity across emerging economies.
1.1. MINT Economies
In the history of international business, four waves of
MNEs are identified. [2] The first generation of the
Multinational Enterprises is the pre-WWI European colonial
period that several European multinationals appeared on the
global stage. After the WWII, American multinationals
dominated the global business networks with a share of 55%
of the world FDI stock. The late 1980s and 1990s Japanese
firms expanded in Asia, Europe and the United States.