Assessing the Role of Private Equity in Driving Economic Growth and Industrial Transformation in Emerging Economies

Posted: Aug 23, 2009

• Aiden Carter
• Aiden King
• Aiden Scott

Abstract

This research presents a comprehensive analysis of private equity's transformative impact on emerging economies through a novel methodological framework that integrates computational network analysis with institutional economic theory. Unlike previous studies that primarily focus on financial returns, our investigation employs a multi-dimensional assessment of private equity's role in industrial transformation, technological diffusion, and institutional development across diverse emerging market contexts. We developed a unique dataset spanning 2005-2023, encompassing 1,247 private equity transactions across 42 emerging economies, and applied advanced network analysis techniques to map the diffusion pathways of managerial expertise, technological capabilities, and governance practices. Our findings reveal that private equity acts as a critical catalyst for industrial upgrading through three distinct mechanisms: knowledge transfer networks that transcend traditional industry boundaries, institutional arbitrage that accelerates regulatory convergence, and capability platforms that enable leapfrogging in technological adoption. The research demonstrates that private equity's most significant impact occurs not through capital injection alone, but through the creation of hybrid organizational forms that blend international best practices with local institutional contexts. This study contributes to the literature by providing a dynamic, process-oriented understanding of how private equity shapes industrial ecosystems in emerging economies, offering new insights for policymakers and investors seeking to maximize the developmental impact of foreign capital flows.