China and Latin America Go Global: A Comparison of the Characteristics and Development Phases of Outward Foreign Direct Investment

Abstract

This paper first compares Outward Foreign Direct Investment (OFDI) trends between China and Latin America - the main investors among developing economies today. We discover that although China and Latin American countries have different geographic distributions, their investment in developed countries has increased since the financial crisis. While Latin American countries’ OFDI focus primarily on resource or resource-based industries, China invests heavily - but not predominately - in resource industries. To further understand this trend, we compare the different phases of OFDI in China and Latin America to uncover how differences in path-development patterns explain varying OFDI features (and vice versa). We find differential government attitudes to be important driving forces behind their distinctive internationalization trajectories. The comparative work for this paper is mainly developed at the macro level, filling the gap in the literature regarding the relationship between OFDI trends among developing economies and the role of government in internationalization patterns.

Keywords: Outward Foreign Direct Investment, China, Latin America, Emerging markets, Developing countries, Emerging Multinationals