NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, April 12, 2005

Developing countries are attracting increasing amounts of foreign direct investment?from each other
Third-world multinationals often do rather better in poor countries than their first-world rivals. As Messrs Aykut and Ratha note, their pockets are not as deep, but their overheads are lower. Their technology may be less advanced, but better suited to the countries in which they invest. They are often closer to the host country, both geographically and culturally, and they tend to be better versed in the risks of investing in a country where the politics is unpredictable and the economy unstable. The Bank cites the example of Uganda’s mobile-phone market, in which Celtel, a subsidiary of Britain’s Vodafone, once enjoyed a comfortable monopoly. South Africa’s MTN entered the market and built a subscriber base 22 times as large.
Story found here.