Emerging-Market Multinationals: BoP or Not?

Abigail Keene-Babcock — Thu, 17 Jan 2008 17:25:58 -0500

The January 10th edition of the Economist takes note, in two separate pieces, of the huge successes of a handful of large MNCs. It highlights how these firms have successfully shaken up their industries and acquired well-known brands in their efforts to capture large swaths of global market share. Usually this wouldn't mean much for the BoP. In fact, what does the potential acquisition of a luxury brand like Jaguar, or a deal for a steel giant, "cooked up... [by father and son] during their annual skiing holiday in St Moritz," have to do with the BoP?

Maybe not much, but maybe the Economist is on to something. What the magazine was so interested in reporting was not the private sector's search for growth, but rather that all of these MNCs are from "poorer countries" (India, Brazil, China), and each one is making major headway in capturing rich markets. They have also done well in their home markets, meaning that while we are definitely talking about an internationalized business elite, we are talking about one that does business at home, too.

The emergence of ‘developing country' MNCs - Embraer, Mittal, Tata Motors, Cemex, and others - seems to turn on its head the anti-globalization movement's typical characterization of MNCs as Western neocolonial forces working to suck developing countries dry. One wonders if soon the "Western" element will be conveniently dropped from those arguments about capitalist imperialism, or if the arguments will have to be re-defined altogether.

But rhetoric aside, these articles and this trend pose interesting questions about how these MNCs will be viewed by the very large BoP populations in their home countries. Will these MNCs be viewed as a source of national pride, of the hope of a more prosperous future for all? Or will they be seen as profiting from an abundance of cheap labor to make their fortunes abroad and become focal points of social agitation? Will they be icons of the "haves" to the have-nots, or will they be seen as job-creators and leaders of national growth?

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Emerging-Market Multinationals: BoP or Not?