Foreign Direct Investments in Developing countries: The case of Ericsson in Mexico and Vietnam

Abstract: One of the most important notions of our world is “globalization” which affects the lives of human beings in several ways. It is a concept which removes boundaries and limits; therefore, involves a global world, and consequently a global economy. Within the global economy, there are flows of goods, capital, technology and other means of production among different countries. As a result, these movements create a high competition among the different actors of the game. In order to develop themselves in this global economy, firms have to expand their businesses abroad to compete in the international arena. Foreign Direct Investment (FDI) is one of the mostly used ways of internationalization which plays an important role as an engine of employment, technological development, productivity enhancement, economic intensification, and more importantly, as an instrument of technology transfer especially from developed to developing countries. Each country in which foreign companies want to invest has its own characteristics; particular opportunities and barriers from each country might arise when a foreign company starts its investment. This study analyzes the inward FDI in developing countries, by analyzing a case of a Swedish company, Ericsson, in two developing countries: Mexico and Vietnam. The cases of Ericsson in Mexico and Vietnam describe the general business environment, availability of production factors and competitiveness factors in those two countries and provide sets of data in order to build a cross-case analysis and generalize the results of this research.