Accounting for Outward Direct Investment from Hong Kong and Singapore: Who Controls What?

56 Pages Posted: 9 Jul 2000 Last revised: 6 Jul 2022

See all articles by Linda Low

Linda Low

Institute of Southeast Asian Studies, Singapore

Eric D. Ramstetter

Asian Growth Research Institute; Kyushu University - Faculty of Economics

Henry Wai-Chung Yeung

National University of Singapore (NUS) - Department of Geography

Date Written: December 1996

Abstract

After a brief introduction and examination of the economic rationale for accounting for foreign direct investment (FDI), we survey information on outward investors from Hong Kong and Singapore with the aim of illuminating the implications of accounting for such FDI by geographical source or by country of ultimate beneficial owner. By any measure it is clear that a large part of FDI from these economies comes from foreign-controlled firms and hence that ownership-based estimates of FDI from these two economies would be much smaller than the standard, geography-based estimates. However, because outward investment by foreign firms in Hong Kong and Singapore often involves sub- stantial contributions from local staff and partners, an attempt is made to examine the extent of control over investment decisions exercised by these local staff and partners. Case studies from Hong Kong indicate a tendency for for local control over investment decisions to be relatively strong in 4 types of foreign-controlled Hong Kong firms, recently acquired firms, firms with strong local entrepreneurial involvement, customer-oriented firms, and relocated holding companies. On the other hand, evidence froma sample of Thai affiliates of foreign-controlled Hong Kong or Singapore investors suggested that many of the investors were acting as part of an integrated network of foreign investors. Thus, although it is clear local staff and partners have a large influence over the investment decisions of foreign-controlled outward investors in Hong Kong and Singapore, it does not appear that such firms are a majority among foreign-controlled investors in these economies.

Suggested Citation

Low, Linda and Ramstetter, Eric D. and Yeung, Henry Wai-Chung, Accounting for Outward Direct Investment from Hong Kong and Singapore: Who Controls What? (December 1996). NBER Working Paper No. w5858, Available at SSRN: https://ssrn.com/abstract=225643

Linda Low (Contact Author)

Institute of Southeast Asian Studies, Singapore ( email )

30 Heng Mui Terrace
Pasir Panjang 119614
Singapore

Eric D. Ramstetter

Asian Growth Research Institute ( email )

11-4, Ohtemachi, Kokurakita-ku
Kitakyushu, Fukuoka 803-0814
Japan

Kyushu University - Faculty of Economics ( email )

6-19-1, Hakozaki
Higashi-ku
Fukuoka, Fukuoka 8128581
Japan

Henry Wai-Chung Yeung

National University of Singapore (NUS) - Department of Geography

10 Kent Ridge Crescent
Singapore 0511
Singapore

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