From poverty to power - Oxfam-Québec

FROM POVERTY TO POWERlocal producers and SMEs. Brands are a crucial asset for major corporationsin their quest for consumer allegiance, and represent a seriousnew obstacle for smaller businesses obliged to compete with thebigger players.While large foreign companies account for a minority of overallinvestment and employment, their clout is increasing, both in termsof investment volume and the introduction of new technology ormanagement practices that domestically owned companies thenfollow. Driven by waves of privatisation, deregulation, and the growthof global production chains, the past 15 years have seen levels offoreign direct investment (FDI) to developing countries increaserapidly – from $43bn in 1990 to $316bn in 2006. 142Although it is often pointed out that FDI has flowed mainly to thebig economies, this largely reflects their greater economic power andlarger populations. Five countries – Brazil, China, India, Mexico, andthe Russian Federation – accounted for 46 per cent of net FDI inflowsin 2005, but this compared with a 55 per cent share of developingcountrypopulation and 63 per cent of their GDP. 143South–South investment is rising faster than North–South flows,as firms in China, India, South Africa, and the East Asian tigers gomultinational. Compared with their developed-country counterparts,southern TNCs are more likely to be state-owned and many arebased in the primary sector (oil, gas, mining) or resource-based manufacturingsuch as iron, steel, and cement. 144 Malaysian and SouthAfrican investors contributed almost a third of the foreign exchangeraised by privatisation efforts in the poorest countries between 1989and 1998. All the major players in the African telecommunicationssector are from other developing countries; these companies havebeen able to use their operating experience in their home markets tocope with the particular risks of doing business in poor countries. 145172