Home Country Determinants of Outward FDI: A Study of Select Asian Economies
27 Pages Posted: 26 Jan 2013
Date Written: January 25, 2013
Since the early 1990s, developing countries have seen a rapid growth in their outward investments. The share of South, East and South-East Asia in global outward FDI has substantially increased in the last two decades. Due to the increasing importance of this region in global outward FDI, this paper attempts to examine the home country determinants of outward FDI in ten select economies of the region. With the help of panel data for the period 1991-2010, this paper models the role of home country “push” factors in promoting outward FDI. A fixed effects (Least Squares Dummy Variables (LSDV)) model is developed that captures market conditions, policy variables, economic variables and production factors. We have also used Principal Component Analysis to augment the model’s analytical richness. The results indicate that GDP and FDI openness are important home country factors affecting outward FDI. Countries with high GDP and a more liberal and open FDI policy have larger FDI outflows.
Keywords: Outward FDI, push factors, Asian economies
JEL Classification: F21, F23, O16
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