The world is now replete with Suzlons: global companies from emerging economies buying businesses in rich countries as well as in poorer places. Another Indian company, Tata Motors, looks likely to add to the list soon, by buying two grand old names of British carmaking, Jaguar and Land Rover, from America's enfeebled Ford. As a symbol of a shift in economic power, this is hard to match.
Economic theory says that this should not happen. Richer countries should export capital to poorer ones, not the other way round. Economists have had to get used to seeing this turned on its head in recent years, as rich countries have run large current-account deficits and borrowed from China and other emerging economies (notably oil exporters) with huge surpluses. Similarly, foreign direct investment (FDI) -- the buying of companies and the building of factories and offices abroad--should also flow from rich to poor, and with it managerial and entrepreneurial prowess.
It is not yet time to tear up the textbook on FDI. According to the UN Conference on Trade and Development (UNCTAD), in 2006 the flow of FDI into developing economies exceeded the outflow by more than $ 200 billion. But the transfer of finance and expertise is by no means all in one direction. Developing economies accounted for one-seventh of FDI outflows in 2006, most of it in the form. of takeovers. Indian companies have done most to catch the eye, but firms from Brazil, China and Mexico, in industries from cement to consumer electronics and aircraft manufacture, have also gone global. Up to a point, emerging-market multinationals have been buying Western know-how. But they have been bringing managerial and entrepreneurial skill, as well as just money, to the companies they buy: British managers bear grudging witness to the financial flair of Mexican cement bosses; Boeing and Airbus may have learnt a thing or two from the global supply chains of Brazil's Embraer.
Perhaps no one should be surprised. Half a century ago, Japan was a poor country: today Sony and Toyota are among the best-known and mightiest companies on the planet. South Korea and Taiwan are still listed as developing countries in UNCTAD's tables, but that seems bizarrely outdated for the homes of Samsung and Taiwan Semiconductor. Now another generation is forming. To its critics, globalisation may be little more than a licence for giant Western companies to colonise the emerging world, yet more and more firms from poorer economies are planting their flags in rich ground.
Alas, further liberalisation is not certain. The Doha round of global trade talks has been bogged down, partly in squabbles about farm trade but also over industrial tariffs in the emerging world. The services negotiations are half-hearted and direct talks on FDI were ruled out long ago, largely because of developing countries' fears about rich invaders. And the gains forgone are considerable: a new book by the World Bank estimates that reforming services in developing countries could raise their growth rates by a percentage point. Were OECD countries to allow temporary immigration of skilled workers in service industries, the global gains might exceed $ 45 billio
A. It's a multinational company characterized by green technology.
B. It was originally a Belgian company acquired by an Indian firm.
C. It's an example of emerging economies buying businesses in rich countries.
D. The parent of the company started from a business in wind energy.
Which of the following can serve as an appropriate title for the passage?
A. Who's in E-commerce?
B. Mind over eMatter
C. Sharing Brains on Net
D. E-publishing and Traditional Publishers