Management International Review

, Volume 49, Issue 1, pp 11–26 | Cite as

Financial Foreign Direct Investment: The Role of Private Equity Investments in the Globalization of Firms from Emerging Markets

  • Tamir Agmon
  • Avi Messica
Research Article
First Online:
Received:
Revised:
Accepted:

Abstract and Key Results

  • One major change in the world of international business and finance is the growing role of private equity investments in firms in emerging markets. In little more then four years, since 2003, the money raised by international, primarily American private equity funds for investment in emerging markets went up about ten times, from $3.5B to $35B.

  • This paper provides a multidimensional analysis and discussion on the role of private equity funds in the globalization process of firms from emerging markets. The discussion begins with development economics, focusing on financial markets development and sector specific capital, proceeds to a discussion of local comparative advantage and intangible trade costs in the process of globalization, and continues with a discussion of imperfect contracts and financial contracting based on recent research in financial economics.

  • The multidimensional character of the research is congruent with the nature of globalization and international business. Investment of private equity funds in emerging markets is shown as a new form of foreign direct investment dubbed FFDI (financial foreign direct investment).

Keywords

Emerging Markets  Financial Markets Development  FDI  Globalization 
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Copyright information

© Gabler Verlag 2009

Authors and Affiliations

  • Tamir Agmon
    • 1
  • Avi Messica
    • 2
  1. 1.Rishon LeZion UniversityGraduate School of BusinessTel AvivIsrael
  2. 2.Holon Institute of TechnologyTechnology Management DepartmentHolonIsrael

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