The Sustainable Development Effects of Investment by Emerging Market Multinationals: Shaping Beneficial Outcomes for Home and Host Country

Abstract

Emerging-market multinational enterprises (EMNEs) play an increasingly important role as investors in developing economies. When certain conditions are met, their foreign investment can contribute to host-country progress towards the Sustainable Development Goals (SDGs). Moreover, foreign investment by EMNEs could also bring positive development effects for the home economies from which they internationalize. However, some concern exists about the possibility that gains will not be equitably shared or that potential will be not realized in one or the other. This article aims to shed light on the conditions that will allow both the home country of an EMNE and the host country receiving its investment to make progress towards the SDGs. Five areas for policy action are presented, together with a research agenda. It is argued that the most promising measures encourage foreign investment to be long-term, stimulate linkages between EMNEs’ home-country partners and host-economy firms, incentivize home- and host-country firms to take on new roles within global value chains, capitalize on institutional upgrading potential and tie certain conditions to the right to access natural resources. Both home and host countries could then potentially benefit from EMNEs’ outward investment and make progress on goals related to poverty alleviation (SDG 1), economic growth and the creation of decent work (SDG 8), infrastructure development (SDG 9) and institutional upgrading (SDG 16).

Keywords: Sustainable development, SDGs, emerging market multinationals, foreign investment, economic progress, poverty alleviation, investment policy