43386623

Foreign Direct Investment Outflows : Asian Developing Countries
Author(s): Sayeeda Bano and Jose Tabbada

Source: Journal of Economic Integration, Vol. 30, No. 2 (June 2015), pp. 359-398
Published by: Center for Economic Integration, Sejong University
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of EconomicIntegrationTGI
Journal
Vol.30No.2June 2015, 359-398
11130/jei.201
5.30.2.359
http://dx.doi.org/10.
Foreign
: Asian
Direct
Developing
Investment
Outflows
Countries
Sayeeda Bano
The
New
Zealand
Hamilton,
University
ofWaikato,
JoseTabbada
Institute
andDevelopment
The
Studies,
Quezon
for
Strategic
City,
Philippines
Abstract
fromEast, Southeast,and SouthAsian developing
ForeignDirectInvestment
originating
countrieshas increasedsignificantly
since 1980. This paper examines the extentand
determinantsof Foreign Direct Investmentoutflowsfromthese countriesbetween
1980 and 201 1. We use selectedhome country-specific
macroeconomicvariablesand
identifies
thekey determinants
of ForeignDirectInvestment
outflowsusingcorrelation
and regressionanalysis.The resultsshow thatForeignDirect Investmentoutflowsare
closely associatedwithhighlevels of Gross Domestic Product,highdomesticsavings,
and relativelylargeForeignDirectInvestment
largeforeignreserves,exportorientation,
inflowsin thesourcecountries,withthestrength
and importanceof each factorvarying
withthe level of development.Our main conclusion is that,althoughnon-traditional
* Corresponding
Author:
Bano; Department
ofEconomics,
TheUniversity
ofWaikato,
New
Sayeeda
Hamilton,
Tel:+6478384931,
Fax:+6478384331,
E-mail:
Zealand;
sbano@waikato.ac.nz.
Co-Author:
JoseTabbada;
Institute
forStrategic
andDevelopment
ThePhilippines;
Studies,
Diliman,
Quezon
City,
Tel:+632931
E-mail:
1022,
josetabbada@hotmail.com.
Theauthors
their
sincere
thanks
totheDepartment
ofEconomics,
ofWaikato.
Acknowledgements:
express
University
Oursincere
thanks
toBrian
Silverstone
for
hisvaluable
comments.
Thanks
andappreciation
isalsoduetoSuhail
Farhad,
Haseeb
Neilita
Tabbada
andDongZhigang
fortheir
research
assistance.
Anearly
version
ofthispaper
was
Bhatti,
atthe2012EuroAsiaManagement
Studies
Association
Conference
attheNational
held
presented
(EAMSA)
University
ofSingapore.
Ourthanks
arealsoduetoconference
Maria
theanonymous
referee
andthejournal
delegates,
Fitzgerald,
editor
for
their
valuable
comments.
errors
andomissions
areentirely
ourown.
Any
remaining
2015-Center
for
Economic
AllRights
Reserved.
IXelSSN:
1225-65
1976-5525
Institution,
Integration,
Sejong
Sejong
University,
pISSN:
~ Vol.30
No.2f
2015,
359-398
June
http://dx.doi.Org/i0.lli30/jei.20i5.30.2.359
BanoandJose
Tabbada
Sayeeda
ForeignDirect Investmentoutflowshave so farbeen confinedto a limitednumberof

developingcountries,
mostlyAsian,otherdevelopingcountriescould also becomecapital
environment
and appropriate
domesticpolicies.
exporterswitha supportiveinternational
JEL Classifications:F21, F43, F41
Keywords: ForeignDirect Investment,Developed Countries,Developing Countries,
East Asia, SoutheastAsia, SouthAsia
I. Introduction
It was once assumed thatForeign Direct Investment(FDI) naturallyflows from

moreindustrialized
to less-industrialized
to capital-scarce
countries,or fromcapital-rich
developingcountries.In recentdecades, however,a new phenomenonhas appeared,
namely,a reverseflow of FDI (henceforthreverseFDI) fromthe developing to the
of the
developedand to otherdevelopingcountries.This phenomenonis a continuation
processof globalizationthathas been goingon since thesecond halfof the 19thcentury,
interrupted
onlybrieflyby WorldWars I and II and theGreatDepressionof the 1930s.'
The majorityof FDI still originatesfromdeveloped countriesand goes to other
developed countries(UNCTAD 2012) but duringthe past couple of decades, reverse
FDI has become substantialand significant
of researchers.
enoughto attracttheattention
In 2008, forexample, therewere 21,000 multinationalenterprisesfromdeveloping
countriesand nearly2,000 fromtransition
economies.Of the former,3,500 were from
China, 1,000fromRussia,815 fromIndia,and 220 fromBrazil (Sauvantet al. 2009).
Reverse FDI is not an entirelynew phenomena. It may have startedwith Japan
duringthe 1960s and 1970s, barelytwo decades afterthecountry'sindustrialbase was
reducedto rubbleduringWorldWar II. Japanwas thefirstAsian countryto experience
modernindustrializationas well as rapid and sustainedeconomic growth.Japanese
investment
flowedin successive waves - firstto the so-called Asian tigersor dragons
20'h
areaware
that
it
While
most
writers
consider
tobea late
the
more
ones
globalization
century
phenomenon,
history-conscious
onfor
most
ofthe
201century,
and
back
asthe
second
half
ofthe19' century
under
various
other
hasbeen
actually
going
may
goasfar
isthe
names
such
asinternationalization
andimperialism.
What
differentiates
the
current
ofglobalization
from
earlier
ones
phase
speed
ininformation
oftransport,
communications
andfinancial
the
latter
two
duelargely
tothe
revolution
andcommunication
transactions,
technologies.
360
jei
consistingof Hong Kong, South Korea, Taiwan, and Singapore,thento otherrapidlySoutheastAsian countries(Malaysia, Indonesia,and Thailand) and next
industrializing
to NorthAmerica,particularly
theUS, and theEuropeanUnion (EU). Japan'soverseas
expansion was replicatedduringthe 1980s- 1990s by the Asian tigers.Now, other
countries,China, India, Indonesia,Malaysia, and Thailandhave
rapidly-industrializing
also joined the line. By the sheer size of theirpopulationsand domesticeconomies,
China and India will altertheworld's investment
profile.Already,Indianmultinationals
such as Tata and Wipro and Chinese firmssuch as Huawei and Lenovo are becoming
householdnames in host countries.A sample of multinationalcorporationsfromthe
selecteddevelopingcountriesis shownin Table 1.
361
7 Vol.30
No.2,
2015,
359-398
June
http://dx.doi.org/10.1U30/jei.2015.30.2.359
BanoandJose
Tabbada
Sayeeda
Table 1. Multinationals fromdeveloping countries

TotalAssets Number
of
where
NameofFirm Nationality(inbillion
US countries
firm
2013)
dollar,
operates
Products
orServices
Steel,motors,
power,chemicals,
teleservices,
beverages,
hotels,
. .
u
communications,
consultancy
services
2
^Tata
Group
r
T
India
t/xt107.17
100+
Wipro
India
6.9
60
Information
technology,
andoutsourcing
consulting
services
Mexico
38.02
50+
Cement,
aggregates,
related
cement,
ready-mixed
and
services.
products
ZhejangGeely
* 5
TT,
HoldingGrp
.
^.
China
. _
,16.05
^
2
6
ri
Huawei
China
39.463
100+
f'f'.
Telecommunications
.
, services
Aand
equipment
7
Lenovo
China
34
60+
PCs and
Personaltechnology,
. .
... .
mobileinternet
devices
26.68
fuel
foodpackaging,
Beverages,
andoil,mining,
infrastructure,
.telecommunications
i
aviation,
Group Malaysia
Genting
21.81
Leisureandhospitality,
power
oilpalmplantation,
generation,
oil andgas
ThaiUnion
FrozenProducts Thailand
PublicCo.
3.34
Frozenandcannedsea foods,
animalfeeds,
packingproducts,
aquaculture
Instant
noodles,palmoil,flour
milling,
golfcourse,logging,
u
*i and
a
^
hotel
resort,
property
development
CEMEX4
an igue
g
Corporation
r
h
SalimGroup
i2
,^
lette
roup
Philippines
Indonesia
etnam
20.0
( 1997)
7.0
Revenue)
Qpota
Automobile,
. motorcycle,
powertrain
Mobilenetworks,
services
telecommunication
~Founded
business
sectors:
inseven
100operating
over
andcomprises
isa global
in1868,
the
Tata
companies
enterprise
group
chemicals
and
consumer
2014).
(Tata
information
and
communications
services,
materials,
products
energy,
engineering,
technology,
3
with
and
information
145,000
isa global
Ltd
serving
employees
(NYSE:WIT)
outsourcing
company
consulting
technology,
Wipro
Ltd
in60countries
over
900clients
2014).
(Wipro
4CEMEX
andaggregates
concrete
andsells
that
cement,
materials
isa global
distributes,
ready-mix
produces,
company
building
S.A.B.
East
and
Asia
the
Middle
the
2014).
(CEMEX
Africa,
Americas,
Europe,
throughout
362
jei
Being a new phenomenon,reverseFDI has raised concernsin hostcountries,most
of whichhave previouslybeen home ratherthanhostto FDI. For example,theChinese
car firmGeely's acquisitionof Volvo aroused some negativereactionsin Sweden, the
hostcountry.The Philippines-based
San Miguel Corporation'sacquisitionof controlling
sharesin Australia'sNational Foods, outbiddingits nearestrivalNew Zealand's food
and dairyconglomerateFonterra,meta moreor less similarreceptionin Australia.It is
notjust thehostcountriesthatregardFDI withsome concern,ifnotoutright
In
hostility.
thehomecountries,
therehas also been concern,especiallyduringeconomicslowdowns,
aboutjob loss to hostcountries.
real estate,car and other
Duringthe 1980s, JapaneseFDI in the US entertainment,
industriesaroused intensereactionsin the host country.Terms thatevoked fearlike
second Japaneseinvasionand yellowperilbecame popularin theUS media. Similarly,
whenUS corporations
were spreadingrapidlyacross Europeand elsewherein the 1960s
and 1970s, concernsover an Americaninvasionwere also raised in the hostcountries.
To meetthisAmericanChallenge,Europeancorporations
withtheactivesupportoftheir
wentthrougha periodof consolidationand rationalizationin
respectivegovernments,
orderto be competitive.
This studyis not about hostcountryreactionsto FDI, whetherpositiveor negative,
northeimpactof FDI. Rather,it is abouttheorigin,magnitudeand determinants
of FDI
fromdevelopingcountries.Specifically,thispaperaims to:
manufactures
automobiles
inChina,
wasfounded
in1986
and
isbased
inHangzhou,
Co.,Ltd.
China
Zhejiang
Geely
Holding
Group
with
inLinhai,
bases
Jinan
andChengdu,
ithasa manufacturing
Lanzhou,
manufacturing
China;
Ningbo,
Luqiao,
Shanghai,
Xiangtan,
aswell
asaresearch
and
inAustralia
center
Week
(Business
2014).
factory
development
Huawei
Co.Ltd.
isthe
telecommunications
maker
inthe
overtaken
Ericsson
in2012
world,
Technologies
largest
equipment
having
Co.2014).
(Huawei
Technologies
Lenovo
Ltd.
isaChinese
multinational
that
manufactures
and
sells
Group
computer
technology
company
designs,
develops,
personal
tablet
smart
electronic
ITmanagement
software
and
smart
televisions
workstations,
servers,
devices,
computers,
computers,
phones,
storage
(Lenovo
2013).
Established
in1890
asa brewery,
SanMiguel
isSoutheast
Asia's
listed
(PSE:
and
SMC)
food,
Corporation
largest
publicly
beverage
(San
2014).
packaging
company
Miguel
Corporation,
isa Malaysian
four
listed
entities:
Berhad
anditsmember
Genting
Group
conglomerate
comprising
Genting
companies
Genting
Plantations
Picand
Berhad,
Limited
Berhad,
Malaysia
Genting
2014).
Genting
Singapore
Genting
Hong
Kong
(Genting
Group
TUF's
offrozen
seafood
andexport
started
in1988
when
itembarked
onajoint
venture
with
Mitsubishi
long
history
processing
and
Foods
Union
Frozen
Products
PCL.
Thai
Union
(Thai
Corporation
2012).
Hagoromo
Corporations
by
Group
' TheSalim isIndonesia's
with
assets
Indofood
Sukses
the
world's
instant
Group
biggest
conglomerate
Makmur,
including
largest
noodle
and
a large
Italsoowns
oilpalm
and
conproducer,
(about
km2)
Bogasari,
1,000
flour-milling
operation.
major
plantations
logging
cessions
(Salim
2014).
Group
Viettel
isVietnam's
mobile
network
Itisa state-owned
owned
andoperated
Group
largest
operator.
enterprise
wholly
bythe
ofDefence.
Viettel
its25,000
anaverage
of18million
VND
a total
of5.4trillion
VND
Ministry
pays
month,
employees
salary
per
per
year
201
1).
(Viettel
Group
363
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BanoandJose
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Sayeeda
(i) Describe outwardFDI fromdeveloping countries:theirmajor countrysources,

magnitude,
growthand relatedcharacteristics;
and emergingtrendsand patternsin FDI inflowsand outflows;
(ii) Discerncurrent
theprincipaldeterminants
of outwardFDI fromdevelopingcountries;and
(iii) Identify
(iv) Determinethe extentto whichthese factorsexplainthe outwardflow of FDI from
thehomecountries.
on the
The paper is organizedinto six sections.Section II review recentliterature
determinantsof outwardFDI fromdeveloping countries.Section III presentsdata,
statistics,and figuresdescribingthe growingmagnitudeand significanceof reverse
the major trendsand patterns.Section IV outlineshypothesesforthe
FDI, identifying
observationsmade in theprevioussection,particularly
regardingoutwardFDI. Section
V teststhe hypothesizedrelationshipsand analyses the results,while the finalsection
presentsourconclusionsand policyimplications.
II. Literature
Review
What drives outwardFDI in developing countries?More specifically,what are

of outwardFDI? Why are some developingcountries
the home-country
determinants
thanothers?
sourcesof moreoutwardinvestment
There has been a resurgenceof reportsand studieson FDI followinga diminished
interestin the 1980s and 1990s. These studiesinclude comprehensivereportssuch as
UnitedNationsConferenceon Trade and Development's(UNCTAD) WorldInvestment
Reportand Global InvestmentTrendsMonitor,which trackannual investmentflows
and otherdevelopments,and morenarrowlyfocusedjournal papersand articles.These
studiesprovidea descriptionof FDI such as its growthand magnitude,its source or
origin(home country)and destination(host country),its mode of entry as greenfield
investment(i.e., investmentin new productionfacilities)or as throughmergersand
and whichindustries
or as portfolioinvestment
acquisitions,whetheras directinvestment
or sectors (agriculture,manufacturingor services) are the recipientsof FDI. Some
studiespointto thegrowingrole of sovereignwealthfundsand state-ownedenterprises
as alternative
sourcesof foreigninvestment.
364
jei
Most studieson thedeterminants
of FDI have focusedon thepull factors,or features
of thehostcountriesthatattractor deterFDI inflows.Foreigninvestment
in generalis
notattracted
to poor countries,exceptas sourcesof cheap laborand raw materials;thus,
therehas been a proliferation
of policy-orientedstudiesseekingto make a particular
country'sinvestmentclimate more attractiveto foreignand local investorsby, for
macroeconomicstability,
and
example,maintaining
upgradinga country'sinfrastructure
humanresourcesand improvinggovernanceby minimizingcorruptionand reducing
red-tapein government.
Althoughthisstudyis aboutthepush factors,a briefreviewof
some of the studiesdealingwiththe pull factorsis usefulforunderstanding
the whole
phenomenaof outwardFDI.
A studyof Chinese outwardFDI by Buckley et al. (2007) examined pull factors
such as the host country'smarketsize, rate of growth,naturalresourceendowments,
inflationand opennessto FDI.
ownershipadvantages,politicalrisk,culturalproximity,
The authorsalso examinedpush factors,such as China's outwardFDI liberalization
policy, the distance between home and host countryand exportorientedness.Their
findingsare thatmarketsize (measured by GDP), culturalproximity(measured by
the size of the Chinese diaspora in the host country),FDI policy liberalizationand
exportorientednesshad a significantand positive effecton Chinese outwardFDI.
They also notedthatstate-ownedenterprisesaccountedfora substantialproportionof
China's outwardFDI and thatthe Chinese government
role in
played a veryimportant
encouragingoutwardFDI. Overall,theauthorsnotethatChina's outwardFDI has botha
conventionaland an idiosyncratic
dimension.
Kolstad and Wiig (2012) confirmsome of Buckley et al? s findingsthatChinese
FDI outflowsare attracted
to countrieswithlargeinternalmarketsand abundantnatural
resourcesand thatcountrieswithpoor institutions
of governanceattracted
ChineseFDI,
especially when combined with abundantnaturalresources. Cheng and Ma (2007),
like Buckleyet al. foundthatbetween2003 and 2006, GDP and culturalbondinghad a
positiveeffecton ChineseoutwardFDI in 90 hostcountrieswhilegeographicaldistance
had a negativeeffect.Cheungand Qian's (2009) examinationof Chinese outwardFDIs
in 31 hostcountriesduring1991-2005 confirmedthatnaturalresourcesand a country's
GDP are significant
factorsin attracting
Chinese FDI; however,GDP per capitahad the
oppositeeffect.
The foregoingstudiesfocusedon thepull factors.Banga (2008) providesone of the
most comprehensiveanalyses of home-country
determinants
or driversof FDI from
drivers,domesticdrivers
developingcountries,classifyingthese intocapability-related
365
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BanoandJose
Tabbada
Sayeeda
driversare thenecessaryskills,technology,
and trade-related
drivers.Capability-related
and capitalwhichare requiredto undertakeoutwardFDI. InwardFDI flows
information
are an important
technologyto thehostcountryas
capabilitydriverbecause theytransfer
well as thenecessaryFDI managerialskills. Domesticdrivers,on theotherhand,are the
on domesticfirms,suchas poor infrastructure,
constraints
highcost of capitaland labour
and the limitedsize of the domesticmarket,thatcompel a country'sfirmsto establish
productionfacilitiesin othercountriesin orderto escape these domesticconstraints.
Finally,foreigntradeis an importantFDI driver.Accordingto the productlife-cycle
theory,outwardFDI is a logical next step taken by a firmwhose initialbusiness is
with foreign
exportingto the (prospective)host country,therebygaining familiarity
markets.
Using regressionanalysis, Banga (2008) showed thatmost exports-to-GDPand
driversof outwardFDI, as are previousFDI
are significant
trade-related
imports-to-GDP
and highreal wages, but notthe small
inflowsto thehome country.Poor infrastructure
of outwardFDI.
determinants
size of thedomesticmarket,are also important
Kayam (2009), following UNCTAD (2006), uses home-market conditions,
trade conditions,domestic costs of production,local business conditionsand home
driversof outwardFDI. Kayam's principal
governmentpolicies as the home-country
hypothesisis thatoutwardFDI increaseswithforeigncompetitioncomingfrominward
FDI in the domesticmarket.This happens because inwardFDI crowds out domestic
abroad.As
to seek investment
investment,
opportunities
forcingdomesticentrepreneurs
bureaucratic
profileofthehomecountry
qualityand theinvestment
stability,
government
improve,outflowsof capitaldecrease.
tests,Masron and Shahbudin(2010) examinethe determinants
Using cointegration
domestic
of outwardFDI fromMalaysia and Thailand.The domesticcost of production,
marketand business competitionand the liberalization of the capital marketsare
factorsdrivingoutwardFDI fromthesecountries,buttheir
as veryimportant
identified
of theauthors'findingsand conclusions.
smallsamplesize limitsthegenerality
Tolentino(2010) uses vectorautoregressionto examine the effecton Chinese and
Indian outwardFDIs of selected home-countrymacroeconomicvariables: openness
of the economy,interestratesand exchangerates.The authorhypothesizesthatlower
interestrates(capital abundance)lead to highercapitaloutflows.On the otherhand,an
exchangerate,"by loweringthe capitalrequirment
appreciationof the home-country's
of exports,
of outwardFDI in domesticcurrencyunitsand reducingthecompetitiveness
encouragesoutwardFDI" (p. 104). The authorneverthelessconcludes thatincreasing
366
D^.c
jei
national
global integrationeventuallydiminishesthe role of home country-specific
variablesshouldalso be considered.
factorsand suggeststhatotherexplanatory
Using six case studies fromChina, India and South Africa,all with substantial
outwardFDI, Baskaranet al. (201 1) foundthatthemotivationsof outwardFDI are the
to investin other
multinational
same as thosethatdrivedeveloped-country
corporations
countries:to move up the value chain, to secure raw materialsand to gain access to
markets,
advantagein thehostcountries.
technologyand othersourcesof competitive
III.
FDI
Flows
and
Stocks
This sectionpresentsevidence on FDI inflowsand outflowsas well as FDI stocks

situationin theworld.The
in orderto providea comprehensiveview of the investment
compiledtimeseriesdata on FDI inflowsand outflowsare reportedin Tables 3 and 4 of
theAppendices.This data is also shownby Figures1, 2, and 3 fordevelopingcountries
and Figures4 and 5 fordevelopedcountries.Also, thesharesof FDI of selectedcountries
are shownin Figures6 and 7 forcomparison.
A. Overall
trends and patterns
Developing-country inflows and outflows were on an upward trend during

1980-201 1, withFDI inflowsincreasingalmost 100-foldfrom7 billionUS dollarsin
1980 to 684 billion dollars in 2011 and withFDI outflowsincreasing128-foldfrom
3 billion dollars to 384 billion dollars. Both inflowsand outflowstrackeach other
the period,withthe inflowshigherthanthe outflows,at least since 1990.
throughout
Inflowspeaked in 2000 and 2008 whileoutflowspeaked in 2000 and 2010, withthelater
peak beingverymuchhigherin comparisonas shownin Figure 1. Note thattheinflows
peaked at the startof the recessionin 2008, while outflowspeaked two yearsafterthe
startoftherecession.
367

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BanoandJose
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Figure 1. Foreign direct investmentflowsin developing economies
UNCTADStatistics
(2012).
(Source)
A cautionarynote on the sourceof some FDI flowsis necessary.Recentyearshave
seen the increasingrole of indirectFDI, so-called because the investor'simmediate
For example,
countryof originmaynotnecessarilyreflecttheinvestor'struenationality.
recordedas originating
fromHong Kong (and therefore
listedas of Chinese
investment
multinational
whose
or Hong Kong origin)mayactuallybe thatof an Indonesian-owned
fromtax havens,such as theBahamas and
headquartersis in Hong Kong. Investments
certainotherterritories
in the Caribbean,and fromcountrieswhereholdingcompanies
is
are based, such as Luxembourg,are otherexamples.The effectof indirectinvestment
to overstatetheamountof investment
fromthesesmallcountries,administrative
regions
or entities.Knowingwhichcountriesare tax havensor headquartersitesshouldalertthe
readerto be carefulwheninterpreting
abnormallyhighlevels of FDI comingfromthese
locations.
As a resultof the increased developing-countryflows, the share of developing
countriesof worldFDI inflowsand outflowshas been on an upwardtrend,withinflows
doublingtheoutflowsbothat thebeginning(1980) and at theend of theperiod(201 1).
The shareof developingcountriesin FDI inflowspeaked in 2010, withlowerpeaks in
368
.w^c
jei
and
1982, 1994 and 2004. FDI outflowsfromdevelopingcountriesfolloweda smoother,
generallyupward,trendas shownin Figure2.
Figure 2. The weightof FDI in developing economies
UNCTADStatistics
(Source)
(2012).
The outflowsand inflowsof developingcountriesas a percentageof Gross Fixed
Capital Formation(GFCF) were also on an upwardtrendas shown in Figure 3, with
inflowshigherthanoutflowsduringthe entireperiod.Both flowspeaked in 2000 with
inflowsreaching 16% of GFCF, dropped precipitouslyin 2003 and thenrecovered
thereafter
and reachedanotherpeak in 2007, althoughlowerthanin 2003. Both dropped
again in 2009, thesecondyearoftherecession.
369

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BanoandJose
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Figure 3. FDI in developingeconomiesas percentageof grossfixedcapital formation
UNCTADStatistics
(2012).
(Source)
During the same period of 1980~2011, developed-countryFDI outflows as a
percentageof theworldoutflowdroppedfrom94% to 73%. FDI inflowsintodeveloped
countriesas a percentageof worldinflowsdeclinedfrom86% to 49%. Comparedwith
the outflows,which follow a relativelysmooth curve, FDI inflows into developed
as shownin Figure4. FDI inflowsand outflowsas a
countriesshow sharperfluctuations
percentageof theGDP of developedcountriesfolloweach otherclosely,withoutflows
generallyexceeding inflows,and withbothpeakingin 2000 and again in 2007 as shown
it can be seen fromFigure5. The firstpeak in 2000 followedcloselyto the 1997- 1998
Asian financialcrises,whilethesecondpeak camejust beforethe2008 downturn.
370
ji
Figure 4. FDI flowin developed economies
UNCTADStatistics
(Source)
(2012).
FDI to developed countries grew more than 16 times over the 30-year period
1980~201 1 from46.6 billion US dollarsto 747.9 billion US dollars.Duringthe same
period inflowsto developing countriesgrew at a much fasterrate,from7.5 billion
US dollarsto 684.4 billion US dollars. Over the same period,average FDI inflowsto
developed countriesgrew by 14.4%, to developing countries20.6%, to Japan 3.8%,
to Asia as a whole (i.e., South, East and Southeast,excluding Japan) 18.9% and to
SoutheastAsia 20.8%. Less thanhalfof totalFDI inflowsin 201 1 wentto developing
countries,withmore thanhalf of inflowsstillgoing to the developed countries.This
meansthattherichcountrieswere stilleach other'smajorinvestors.
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Figure 5. FDI flowin developed economies as percentage of GDP
UNCTADStatistics
(2012).
(Source)
FDI outflows
In termsof FDI outflows,thetwo setsof countriesdifferdramatically.
fromdeveloped countriesgrew more than25 times,from48.4 billion US dollars to
1237.5 billionUS dollars;however,FDI outflowsfromdevelopingcountriesgrew 120
times,froma mere 3.2 billionUS dollarsin 1980 to 383.8 billionUS dollarsin 2011.
This is reflectedin thehighaverageannualgrowthratesof FDI outflowsbetween 1980
and 2011: 16% fordeveloped countries,26% fordeveloping countries,32% forthe
whole of Asia (East, South and Southeast)and 32% forSoutheastAsia. It should be
notedthatFDI outflowsfromdevelopingcountrieswere verysmall,or virtuallynil,at
thestartof theperiod,whichpartlyexplainsthelargepercentageincreasesin subsequent
years.
With FDI outflowsfromdevelopingcountriesgrowingfasterthanthose fromthe
developedworld,it could be expectedthattheirpercentageshareof totalFDI outflows
would increase. This is what occurred with the share of total world outflows of
developingcountriesincreasingfromless than2% in 1975 (when data firstappearedon
outwardFDI fromdevelopingcountries)to 6.4% in 1985, 15.3% in 1995 and over23%
in 201 1. Althoughtherewere yearswhen thepercentageshareof developingcountries
decreased,theiraverageshareof FDI outflowsfortheentireperiodwas 11.4%, whichis
372
jei
farhigherthantheirinitial2% share(Figure5).
As a resultof investment
flowsduringpastdecades,theworld'sinvestment
landscape
sourcesand recipientsof FDI, all of which
has changed(Figures6 and 7). The traditional
theUS,
are developedcountries,namelyGermany,Japan,Switzerland,theNetherlands,
theUK, and to some extentAustralia,stilldominatetheworld's investment
landscape.
Figure 6. Percentage of world's outward FDI stock in selected countries
UNCTADStatistics
(2012).
(Source)
As in the case of FDI flows,the distribution
of inwardand outwardFDI stockhas
been highlyunequal. The shareof developingcountriesin outwardFDI stockincreased
onlyslightlyfrom13% of thetotalin 1980 to 14.2% in 2009 and decreasedbetweenthe
two end points,althoughthepercentageshareof East Asia rose from2.4% in 1980 to
7% in 2009 and thatof SoutheastAsia from0.2% to 1.8%. Duringthesame period,the
percentageshareof developedcountriesincreasedinitiallyand thendecreased.
In termsof inwardFDI stock,thepercentageshareof developingcountriesdecreased
from43% in 1980 to 23% in 2000 and thenincreasedto 32% in 201 1. The percentage
shareof East Asia declinedfrom26% in 1980 to 10% in 201 1, while thatof Southeast
Asia increasedonly slightlyfrom3.6% to 5.3%. The percentageshare of developed
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countriesin inwardFDI stock increasedfrom57% in 1980 to 75% in 1990 and then

remainedmoreor less steadyat 76% in 2000 beforedecliningto 64% in 201 1.
Figure 7. Percentage ofworld's inward FDI stock fromselectedcountries
UNCTADStatistics
(Source)
(2012).
How can theincreasingshareof developingcountriesin theannualFDI inflowsand
outflowsthatwe notedearlierbe reconciledwiththeirdecreasingshareof the inward
FDI stock?One probableexplanationis that,althoughFDI outflowsfromdeveloping
countriesincreasedduringtheperiod,mostprobablyto developed countries(as in the
earlierexamplesof Volvo and NationalFoods, thoughthesecases may notnecessarily
be representative),
therebyincreasingthelatter'sinwardFDI stock.Anotherpossibility
is thattheremay be investment
withdrawalsfromdevelopingcountriesas Multinational
hosts because in general,
Corporations (MNCs) seek more investment-friendly
developingcountriesare less stablethandevelopedcountries.
374
jei
B. East, Southeast,
and South Asia
Combining the share of developing countriesin both flows conceals the highly
unequal shares among the developing countries in FDI outflows and inflows.
Disaggregationof the data shows thatonly a small group of countriesaccount fora
large share of total FDI outflowsand inflows.These are East Asia, SoutheastAsia
and South Asia, in particular,India. In 2006, almost60% of totalFDI outflowsfrom
developingcountriescame fromAsia, and withinAsia 80% of thetotalcame fromEast
Asia (excludingJapan).Hong Kong (China), the Peoples' Republic of China, Taiwan
and South Korea account forthe bulk of the region's FDI outflows.The increase is
FDI outflowsfromEast Asia increasedfromalmostzero in 1970 to more
significant:
than103 billionUS dollarsin 2006 and continueto increaseas itcan be seenfromTable 3.
In 201 1,FDI outflowsfromEast Asia droppedby 9% to 180 billionUS dollars(although
theyare higherthanin 2006); whilstthosefromSoutheastAsia rose by 36% to 60 billion
US dollars,comprisingone-third
of theFDI outflowsfromEast Asia. In SoutheastAsia,
FDI outflowsfromSingapore,Thailand and Malaysia increasedthe mostaccordingto
UNDP (xviii2012).
China is particularlyinteresting.In 1981, China's FDI outflowswere a mere 44
millionUS dollars,slightlyover one-tenth
of its inflowof 430 millionUS dollars.The
ratioof outwardto inwardFDI was 1:4 in 1990, 1:3 in 2006 and 1:2 in 2009. If thetrend
itsinwardFDI.
duringthepastfewyearscontinues,China's outwardFDI will outstrip
In Southeast Asia, the five ASEAN member-countriesof Singapore, Malaysia,
Indonesia,Thailandand Vietnamaccountedformorethan90% ofthetotalFDI outflows
fromtheregionin 2006, withtheremainderbeingsharedamongthePhilippinesand four
otherASEAN member-countries
(Brunei,Cambodia, Laos, and Myanmar).Similarly,
withFDI inflows,thesame fiveASEAN countries,particularly
Singapore,receivedthe
largestshare.
Thailand is an interestingcase because during2008-2009, its FDI outflowsand
inflowsbecame close to parity.This happeneddespitethedomesticpoliticalturmoil.In
1980, when Thailand had only 3 millionUS dollarsin outwardFDI whereasVietnam
had none, the Philippinesalreadyhad 86 millionUS dollars in outwardFDI. Overall,
relativeto thatof
thePhilippines'relativepositionas a source of FDI has deteriorated
its neighbors.What is trueof the Philippines'FDI outflowsis also trueof its inflows.
In 1980, or fiveyears afterthe end of theVietnamWar, Vietnam had FDI inflowsof
only 1.67 millionUS dollars,while thePhilippinesalreadyhad 114 millionUS dollars.
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Twelve years later,FDI inflowsto the Philippines,at 1.2 billionUS dollars,were still
higherthanthose of Vietnamwithjust over 900 millionUS dollars.A year later,FDI
inflowsinto Vietnam surpassed those of the Philippines,and since thenthe former
the latter,except forthreeyears,one duringtheAsian
have consistently
outperformed
financialcrisisand the othertwo in its aftermath.
By 2010, FDI inflowsintoVietnam
were fivetimesthoseofthePhilippines,and growing.
In SouthAsia, India accountedformostof theregion'sFDI outflows,whichstarted
modestlywitha mere4 millionUS dollarsin 1980. Outflowsgrewin subsequentyears
to reach 119 million US dollars in 1995, almost 3 billion US dollars in 2005, 14.3
billionUS dollarsin 2006, 17.2 billionUS dollarsin 2007 and 18.5 billionUS dollars
in 2008, beforedecreasingto 14.9 billionUS dollars in 2009. In 201 1, FDI outflows
fromIndia partlyrecoveredthe lost ground,risingby 12% to 15 billion US dollars.
Among developing and transitioneconomies, India remainedthe largestinvestorin
less-developedcountries,followedby thePeople's Republicof China and SouthAfrica
(UNDP 2012, xxix).
FDI inflowsto India have growneven fasterthanoutflowsfromIndia: from79.2
millionUS dollarsin 1980, to 237 millionUS dollarstenyearslaterand to 3.59 billion
US dollarsin 2000. In 2006, annualFDI inflowsexceeded20 billionUS dollarsand later
peaked at 42.5 billionUS dollarsin 2008, beforedecreasing to 35.6 billionUS dollars
in the followingyear,as shown in the Appendices. In 2009, FDI inflowsinto India
were morethan80% of all FDI inflowsto SouthAsia, whiletheproportion
of outflows
fromIndia was even higherat 98% of the total fromSouth Asia. India has a clearly
dominantpositionin SouthAsia on bothsides of theinvestment
flow,in the same way
thatSingaporeis dominantin SoutheastAsia and China in East Asia (excludingJapan).
Both China and India have populationsin excess of one billion;however,Singaporeis a
witha smallpopulation.Size does matter,
withsome exceptions(Tables 4,
tinycity-state
5 and 6).
IV.
Interpreting
Outward
Flows
How may theFDI trends,patternsand tendenciesobservedin theprecedingsections

be explained? As we have pointed out, the bulk of FDI fromthe developing world
376
jet
originatedfroma small groupof countriesin East Asia, SoutheastAsia and SouthAsia.
Individually,and as a group,thesecountrieshave in recentyearsexperiencedrapidand
sustainedeconomicgrowthas well as fundamental
structural
transformation.
By theend
of the 20thcentury,some of them,such as Singaporeand South Korea, had achieved
status.China is now theworld's second largesteconomy,overtaking
developed-country
Japan.
Levels and ratesof GDP growthas well as of incomeper capitaare an indicationof
an economy'swealthand productivity
and itspotentialto save and invest.The largera
country'sGDP and thehigheritsper capitaincomeand thefastertheseare growing,the
in the domesticeconomyor in other
greaterare theresourcesavailable forinvestment
countries.High income levels and rapideconomic growthnot only attractinwardFDI
(size of thedomesticmarketbeingan important
pull factor),buttheyalso driveoutward
FDI by raisingthe country'smarginalpropensityto save and invest.Thus, our first
hypothesisis:
Hypothesis1: FDI outflowsare positivelyassociated withrisinglevels of GDP or
rapideconomicgrowth.
The fast-growing
countriesof East, Southeastand South Asia thathave relatively
high outwardFDI also have high domestic savings rates. During its period of rapid
overseas expansionin the 1960s~1980s, Japanhad veryhigh savingsrate. Singapore,
whichis currently
the source of substantialoutwardFDI fromSoutheastAsia, also has
one of thehighestsavingsratesin theworld,at almost50%. The best currentexample
is China,whichhas one of the largestand fastest-growing
outwardFDI and one of the
world'shighestsavingsratesfora largeeconomy.
Moving fromindividualcountriesto groupsof countries,the same observationof
high savings rate and high outwardFDI is also evident.For the period 2001~2010,
the average savings rateof the world as a whole was 21.3%; but the average savings
rateof the small group of countriesin East, Southeastand South Asia withhigh and
growingoutwardFDI was over 38%, almost double thatof the world average. There
are exceptions:relativelylow savers such as the Philippines,Cambodia and Myanmar,
whose inclusionreduces the region's overall savings rate to 31%. Nevertheless,the
above the world average.
average savings rate of these countriesis still significantly
both in the domestic
High domesticsavings are importantas a source of investment,
economyor abroad.Thus,oursecondhypothesisis:
Hypothesis2: FDI outflowsare positivelyassociatedwithdomesticsavings.
Most countriesthatare in receiptof largeFDI inflowsand have themselvesbecome
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bttp://dx.doi.org/10.11130/jei.2015.30.2.359
BanoandJose
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sources of substantialoutwardFDI, also have a strongtradeorientationindicatedby

high export-to-GDPratios.Japanbest exemplifiedthis featurein earlierdecades, as
did (and stilldoes) Germany.In subsequentdecades, Singapore,Taiwan, South Korea
and Hong Kong have become exportpowerhouses. China is the best contemporary
example. The seemingexceptionto the close connectionbetweenexport-orientedness
and high outwardFDI thatcharacterizesthe regionis India, which fordecades since
the independence,pursuedpolicies thatwere anchoredon socialist-style
planningand
Thathas now changedwithIndia,becominga majorexporter
economicself-sufficiency.
of manufactured
goods and IT services.Indianfirmsare also well represented
amongthe
world's multinationals.
The move of a firmfromexportinggoods or servicesto investingabroad follows
thewell-knownproductlife-cycletheory,accordingto which a firmfirstexportsto a
withthe foreignmarket,and
foreigncountry,while in the process gainingfamiliarity
thenestablishesa productionfacilityin the latter(now the host country),becominga
firmas a result.Our thirdhypothesisis:
multinational
Hypothesis3: FDI outflowsare positivelyassociatedwithstrongexport-orientation.
Countrieswithlargeinternational
reserves,such as China with2 trillionUS dollars
in 2008, Taiwan and Singapore, are also countrieswith large and rapidly-growing
or foreignexchangereservesindicate
outwardFDI. The size of a country'sinternational
not only a country'scapacityto importgoods and servicesand meet its maturingdebt
obligationsbutalso itscapacityto investin othercountries.Thus,our fourthhypothesis
is:
Hypothesis4: FDI outflowsare positivelyassociatedwithforeignexchangereserves.
Evidencesuggeststhatcountriesthatare important
sourcesof outwardFDI have once
been or concurrently
are recipientsof substantialFDI inflows.Banga (2008) identifies
inwardFDI to developing(host) countriesas an important
capacitydriverof outward
FDI fromthese(home) countries.This occursbecause FDI inflowsbringwiththemnot
skills and networks,each
only capital but also technology,organizational/managerial
or all of whichhave the intendedor unintendedeffectof enablinglocal managersand
of foreigninvestors)
domesticentrepreneurs
(who may eitherbe partnersor competitors
shouldtheydecideto make
and thuspreparingthemfortheiroverseasmove as investors,
sucha move. Thus,ourfifth
hypothesisis:
Hypothesis5: FDI outflowsare associatedpositivelywithFDI inflows.
378
je
V. Tests
of Hypothesized
Relationships
A. Data source
The data used in thispaperwere collectedfromtwo databases.The data on GDP and
GDP per capita were retrieveddirectlyfromthe InternationalMonetaryFund (IMF),
WorldEconomicOutlook(WEO) Database (201 1 and 2012). The originaldata on GDP
were also obtainedfromtheWEO Database. FDI inflowsand outflowsweretakenfrom
theUNCTAD Yearbook 2012 (and previousyears).Country-specific
totalreservesand
exportvalues wereretrievedfromtheWorldBank Database (2012 and otheryears).All
data are in billionsof current
US dollars.
B. Correlation
analysis
To test the hypothesizedrelationships,we performedcorrelationand regression

analyses. Pearson correlationswere performedon outwardFDI and savings rate (as
percentof GDP), outwardFDI and GDP, outwardFDI and GDP percapita,outwardFDI
and foreignreserves,outwardFDI and exportsand outwardFDI and FDI inflowsforthe
years1990-2010. The resultsare presentedin Table 2.
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Table 2. Correlation analysis

(1990-2011)
FDI and
Savings
FDI and FDI and GDP

GDP
percapita
FDI and FDI and FDI and

Reserves Exports FDI inflows
China
0.949** ! 0.939** j
0.939**
! 0.948** | 0.902** j 0.860**
India
0.916** j 0.902** j
0.906**
| 0.935** | 0.930** j 0.968**
Indonesia
0.612*
! 0.735** i
0.734**
| 0.638*
Malaysia
0.935** ! 0.939** |
0.926**
0.902** | 0.907** j 0.656*
Philippines
0.368
0.383
| 0.335
Thailand
0.929** | 0.935** |
0.933**
All Countries 0.917** '0.912** j
0.426**
| 0.959** j 0.882** 0.446

!
0.925** 0.892** j 0.846**
0.384
j 0.818** | 0.693**
| 0.405
j 0.469
Bank2012,UNCTAD2012.
World
(Source)
economies.
selection
isonthebasisof2nd
tierEastAsiandeveloping
( i) Country
(Notes)
* Significant
at0.05level(2 tailed).
atthe0.01level(2 tailed)
(ii)**Significant
The resultsgenerallyconfirmthe hypothesizedrelationships.The exceptionis the
betweenoutward
insignificant
relationship
Philippines,whichhas a low and statistically
FDI and the othervariables.China, India, Malaysia and Thailand all show veiy strong
relationships,while Indonesia also has a fairlystrongrelationshipbetween outward
FDI and the othervariables.There is also a statisticallyhighlysignificantcorrelation
betweenoutwardFDI and GDP and GDP percapitain mostofthecountries.Overall,the
betweenoutwardFDI,
analysisclearlyindicatesfairlystrongor verystrongrelationships
domesticsavingsrate,GDP, foreignreserves,exportsand inwardFDI foreach country
individuallyand as a group.
C. Regression
analysis
Ordinaryleast squares regressionwas used to testthe econometricrelationshipand

theimpactof selectedmacro-economicindicatorson theoutwardFDI of China,India,
Indonesia,Malaysia, the Philippinesand Thailand.The data used were takenfromthe
WorldBank's DevelopmentIndicatorsforvariousyears.The testedmodel (withresults
in Table 3) is:
380
+
a + ' GDP + 2 Savings+ Reserve + 4Export+ 5 FDI
FDIouard=
n1m
(1)
where:
= Foreign
FDI outward
Inflows
. = Foreign
7FDI inflow
Outflows;
DirectInvestment
DirectInvestment
=
=
GDP GrossDomesticProduct;Savings DomesticSavings;
Reserve= Reserve;Export= Exports
Table 3. Factors affectingoutward Foreign Direct Investment
(1990-2011)
Variables
Independent
StandardError
Coefficient
p values
i
GrossDomesticProduct
0.017
Savings
-0.039
0.0139
0.006
Reserves
0.0359
0.008
0.0000
Exports
-0.0121
0.008
0.144
FDI inflows
0.0646
0.054
0.236
Constant
-0.589
0.617
0.342
126
0.87
Observations
R2
0.004
0.0006
The resultsshow thatthe most significantfactorsaffectingoutwardFDI in the six

countriesare foreignreservesand GDP, both having significantpositive effectson
outwardFDI. The remainingvariables, on the otherhand, show ambiguous effects
on outwardFDI. For example,the effectsof savings and exportson outwardFDI are
negative,whichis oppositeto our hypotheses.Moreover,althoughtheeffectof inward
FDI on outwardFDI is positive,it is insignificant.
We therefore
performedadditional
testsusingextendedmodels.
381
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D. Regression
analysis:
extended models
In orderto capturethepatternsand othercharacteristics

of outwardFDI, our earlier
model is extendedby using additionalvariables and threedifferent
levels: individual
countries,countrygroups classified by developmentlevel and the whole/combined
dataset.All data are from1990 to 2011. Countriesincludedare Australia,China,India,
Indonesia,Malaysia,New Zealand, thePhilippines,and Thailand.The dataseisforGDP
and GDP per capita were retrievedfromtheWorld Economic OutlookDatabase of the
IMF (201 1, 2012) and thedatasetfortotalsavingscomes fromtheauthors'calculations
of gross nationalsavings as percentageof GDP fromthe same database. The dataseis
on FDI inflowsand outflows,total foreignreservesand exportswere retrievedand
US dollars.
calculatedfromtheWorldBank Database. All data are in billionsof current
The extendedmodelscan be summarizedthroughthefollowingformulations:
Model 1:
FDI (outflow)= a + xGDPt + 2GDPt i + fiDP^ + /DI (inflow)
t+
+
f DI (inflow) + f DI (inflow)
2 + 1SAVING/+ AVING M
+
+
+
9SAVINGi2+ iQRESERVEi nRESERVEtA nRESERVE2
Êxportt+ Êxporttx+ Êxporti2 + g
(2)
Where
t= at timet (current
year); t-1 = previousyear; t-2= previoustwoyears.
We also used two othermodels to examinewhetherpopulationcan affecttheresults
because China and Indiabothhave verylargepopulation.These twomodels
significantly
are similarto theabove models;theonlymodification
beingthereplacementof GDP by
GDP percapitaand /GDP by /GDP percapita.
Model 2:
FDI (outflow)= O. + ^ lnGDPt+ JnGDP H + nGDP ^ + /DI (inflow)( +
+
+
tA+ 6FDI (inflow)
i2 + 1lnSAVINGt JnSAVINGH
5FDI (inflow)
+
+
9lnSAVINGi2 JnRESERVE+ JnRESERVE^
+
+
+
ulnRESERVEi2+ 1}Exporti Êxportx Êxport2 e
(3)
in
difference
The use of GDP per capita insteadof GDP does notmake a significant
382
jei
explainingFDI outflows,hence theresultsusing GDP per capita are not reportedhere.
We also testedtheexportsvariableusingtwo-periodtimelags fordifferent
countriesand
effectsof lagged exports
countrygroups.The resultsshowed mixed and insignificant
on outwardFDI flows,so we reportedonlyone of themin our findingsforindividual
countries.
E. Results for individual
countries
resultthat
The two most significant
results,one multiple-regressor
single-regressor
resultsthat
comprisedall five variables and the most significantmultiple-regressor
we can obtainforeach country,are shown in Table 8 (parts 1-3). Several patternsand
observationscan be deduced fromthe regressionresultsusing the extendedmodels.
reserves,FDI
First,at the individualcountrylevel, GDP, total savings, international
inflowsand exports-to-GDPdifferin theirexplanatorypower forthe outwardFDI of
different
countries.For instance,in case of AustraliaFDI inflowsare themostpowerful
regressorforFDI outflows,explaining81% of changes;butin case of New Zealand FDI
effect
inflowscan only explain 12% of the changes in FDI outflows.This differential
is also presentamong the developingcountriesin our sample. For example,while the
explanatory
powerof FDI inflowsis 93% forIndia,it is only 19% forthePhilippines.
can be foundforGDP, totalsavings,totalreservesand exportswhen
Similardifferences
theseare used as single regressors.The fiveregressorsalso show similarexplanatory
power fora single country'sFDI outflows,except forAustralia,where FDI inflows
are morepowerfulthanotherregressorsin explainingFDI outflows.For example,the
adjustedR-squareof Thailand's regressionhas a value between87% and 96%, but for
thePhilippines,itsvalue is onlybetween13% and 18% (Table 8, parts1-3).
Second, regressionresultsusing GDP, totalsavings,totalreserves,FDI inflowsand
as variablesexhibitinteractions
betweenthemas shownby themultipleexports-to-GDP
regressorresultsand theirsimilarexplanatorypower forone particularcountry.For
for
instance,the adjustedR-squareof India's regression(4) is 99%, but the coefficient
reserv
eH is -0.09,whichmeans thatwhenthereservesof India increaseby 1 billionUS
dollars,FDI outflowsin thefollowingyeardecreaseby about2 millionUS dollars.This

may be explainedby multicollinearity
problems.As mentionedbefore,theexplanatory
power of most models is very high,which confirmsthe findingof our preliminary
analysesand also supportsour hypotheses;however,because theregressorsare highly
383

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correlatedwitheach other(e.g., the correlationbetweenChinese GDP and savings is

0.99 and thatbetweenIndia's GDP and savingsis also 0.99), theremay be no way to
determinethecausalitybetweenthemthroughtheavailable data.
Third,anothercharacteristicshown by the above resultsis thatFDI outflowsare
relatedto the total amountof the regressorsinstead of changes in them.In all eight
countriesincludedin thesample,onlyone logarithmic
regressorcan be includedamong
thetopthreesignificant
regressors.
with
taken
intoconsideration,
GDP, totalsavingsand totalreservesare
Finally,
lags
determinants
of a country'sFDI outflows,but FDI inflowsand
statistically
significant
forChina,
exportshave no such effects.Time-laggedreservesare especiallyimportant
Malaysia and Thailand.In all threecountries,reserve^by itselfcan explainabout 90%
at the0.01% level.
ofthechangesin FDI outflows,withthecoefficients
beingsignificant
F. Results for country groups

To determine
whethertheabove resultsalso hold at thecountrygroup/general
level,
panel data on developedcountries,developingcountriesand thewhole datasetwere also
used in our models. The most significant
resultsforeach countrygroupare reportedin
Table 9. For developedand developingcountries,a singleregressorstillhas explanatory
in thefirsttwocolumnsofTable 7.
powerforchangesin FDI outflows.These are reported
The patternsand characteristicsof FDI outflows of developed countriesdiffer
fromthoseof developingcountries.First,FDI inflowsare themostimportant
factorin
explainingFDI outflowsin developed countries.Even the most significantmultipleregressorregressioncan only increase the explanatorypower of single FDI inflows
from82% to 87% and mostofthecoefficients
of theotherregressorsare statistically
not
Exportsand savingsof thepreviousyearare two factorsthatcan also partly
significant.
explainchanges in FDI outflowsof developed countries.For developingcountries,on
theotherhand,themostpowerfulexplanatory
factoris thehome country'sinternational
reservesofthepreviousyear.13
PreviousyearGDP and FDI inflowsalso have satisfactory
explanatorypower,althoughnot as much power as reservet. The multipleregression
resultsfordeveloped and developingcountriesshow the differencemore clearly.For
factorin explainingFDI
developedcountries,FDI inflowsare thesinglemostimportant
3International
reserves
ofIMFmembers
held
IMFand
reserves
ofmonetary
comprise
holdings
gold,
special
drawing
rights,
bythe
offoreign
under
the
control
ofmonetary
authorities
Bank
(World
2012).
holdings
exchange
384
jei
outflows.No significantrelationshipsare observedbetweenFDI outflowsand either
GDP or totalsavings.For developedcountries,
totalreservesand previousyearreserves
have an ambiguous relationshipwithFDI outflows.For developing countries,GDP,
domesicsavingsand previousyearreservesare themostimportant
factorsin explaining
FDI outflows,and FDI inflowshave no significant
withFDI outflows.
realtionship
Anotherpatternthatcan be observedfromthe resultsis that,comparedwithother
regressorsin ourmodel,totalsavingsare a weak regressorforexplainingchangesin FDI
outflows.This may be explainedby the Feldsteineffect.Althoughsome resultsshow
thatlaggedsavingshave similareffectsas GDP, thetotaleffectof savingsis notclear.
The resultsforthe whole sample are also reported.Comparedwithdeveloped and
developing-countrygroups, the resultsforthe whole dataset do not have the same
of developedand
significance.An explanationforthisis thatthe special characteristics
developingcountriesare weakenedin thewhole data set because theresultsare mixed;
however,theresultsshow thatFDI inflows,GDP and reservesare relatedpositivelyto
FDI outflows.
How can theobserveddifferences
in thepatternsand characteristics
of FDI outflows
of developedand developingcountriesbe explained?For thedevelopedcountries,
which
have experiencedlong-term,
FDI outflowshave two motives.
high-growth
development,
First,to investin rapidly-growing
developingcountriesin orderto obtainhigherreturns
thanthatcan be had in thefirm'sdomesticeconomy.Wherecapitalis abundant,as in a
themarginalreturnon investment
is generallylow. Wherecapitalis
developed-country,
scarce,as in a less-developedcountry,themarginalreturnis generallyhigher.Second,
MNCs use FDI as a financialinstrument
to hedge financialrisks,in otherwords,as a
riskdiversification
strategy.The firstinferencecan explain why thereis no observed
betweenFDI outflowsand GDP in thesecountries.The second can explain
relationship
the significantrelationshipbetweenFDI outflowsand FDI inflows.Catch-upeffects,
because developingcountriesare experiencinglong-term
economic growth,will cause
FDI outflowsto growat thesame pace as othervariablessuch as GDP, FDI inflowsand
reserves.
Our studydiffersfrommost otherstudies on FDI outflowsin thatit focuses on
thepush factorsin the home or source countriesinsteadof the pull factorsin the host
countries.In addition,otherstudieshave used variablessuchas highdomesticproduction
costs (principallyin theformof highwages) as an important
driverof outwardFDI. We
have considereddifferent
variablesincludingGDP, GDP per capita,exportorientation
and the openness of the economy,as indicatedby high exports-to-GDPratios,high
385
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359-398
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BanoandJose
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foreignreserves,capital abundancefromhighdomesticsavingsratesand inwardFDI,

whichtransfers
technologyand othercapabilitiesto thehost(now home) country.
VI.
Conclusion
betweenoutwardFDI and domesticsavings,

Our studyshows thattherelationships
GDP, GDP per capita and FDI inflowsforselectedcountriesare generallystrong,but
theimportance
of thevariablesdiffers
betweendevelopedand developingcountries.FDI
outflows.For developing
inflowsare an importantdeterminant
of developed-country
reservesare statistically
determinants
countries,
GDP, exportsand international
important
foroutwardFDI. Overall,the findingssuggestthatfora developingcountryto aspire
to be a capitalexporterthroughFDI, it mustpossess all or mostof the following:high
domesticsavingsrate,an export-oriented
economy,a GDP thatis growingrapidlyand
reserves.In short,fora developingcountryto become a capital
substantialinternational
exporterthroughFDI, itneeds to grow,save and look outward.
What are some implicationsof these outcomes? Are theygood or bad, positive
or negative,forthe countriesinvolvedand forthe world as a whole? We believe that
the rise of new economic playersof new firmsfromdevelopingor newly-developed
countriesthatare able and willingto investin othercountries,is a positivedevelopment,
both foreconomic well-beingand forworld peace and stability.FDI tendsto lead to
in boththehome and hostcountry- althoughsome sectors,suchas
economicprosperity
workersin thehome countryand capitalistsin thehostcountry,may experiencelosses
or new
in the shortterm.If,however,theinvestment
(whethercomingfromtraditional
sources) leads to a more efficientallocationof resources,societyas a whole standsto
gain in thelongrun.
Given thata new patternof FDI has emerged,whatpolicies,eitherderivedfromour
findingsor fromotherstudies,shouldbe consideredat boththenationaland regionalor
international
levelsto enableand encouragemorecountriesto participate?
At thenationallevel:
Competitionpolicies shouldbe pursuedby governments.
These policies encourage
nationaland international
investment.
386
je
Outward-lookingpolicies, the integrationof national economies into the global
order,are usually favorableforgrowthand development.Raise domesticsavings
rateas a sourceof domesticand foreigninvestment.
To succeed in the international

market,a countrymustoffera productor service
thatis superiorin priceor qualityto thatofferedby others.Negotiatewithforeign
investorsfortraining
and transfer
of technologyto domesticfirms.
Encourage and supportthe formationof industryclusters.Globally-competitive

firmshave usuallycome fromindustry
clustersdefinedby Michael Porter(1990) as
concentrated
firmsthatcompeteas well as collaborate.
geographically
At theregional/international
level:
Pursueefforts
to reducebarriersto thefreeflowof goods and services,capitaland
or in thecontextofregionaleconomicintegration.
labor,eitherunilaterally
Encourageaccess to the domesticmarketsof industrializedcountriesby reducing
barriers.A way fornationsto resolvetheirconflictsthrough
peacefuland diplomatic
means and not throughforceor threats.Rapid growthand developmentoccurs in
peacefultimeperiodsratherthanin conflictperiods.
Finally,whatfuturedirectionsshouldresearchon thistopictake?We have examined
the macro-levelfactorsthatdrivedeveloping-countries
to investabroad. Studies at a
firm,industryor sectorlevel are a logical next step. We are aware of researchin this
area, but thereis scope forfurther
analysis. Studies could address two broad issues.
At the empiricallevel, what are the differences,if any, between developing-country
multinationals
and the multinationalsestablishedearlierin developed countries?At a
theoreticallevel,are thetraditional
theoriesof themultinational
associated,
corporation,
forexample,withDunning,Hymer(1979) and Vernon(1966) and whichwereprimarily
derivedfromtheexperienceand in thecontextof themoredevelopedcountries,
adequate
to explainthenew phenomenonofreverseFDI?
Received28 June2013, Revised8 October2014, Accepted20 April2015
387

7
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X Vol.30
No.2,
2015,
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June
BanoandJose
Tabbada
Sayeeda
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World Bank. "World DevelopmentIndicators."Accessed June29, (2014). http://data.

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390
o- -
jei
Table 4. Annual growthof FDI inflow

current
(inBillionUS dollars,
rate)
East, I
^
^
^
^
^
^
|SutFhaef
&"st I %
% jaDa % Developing%
South
&
%
^'Ped
Year WorldEconomies
P
Growth
Growth
economies
Growth
Southeast
Growthv . Growth
1980 $54.1 $46.6 i
$0.3j
$7.5 j
1981 $69.6 $45.5 j -2.3 $0.2j -32.0 $24.0 j 221.5
1982 $58.1 $31.7 j -30.4 $0.4j 132.3 $26.4 ! 9.7
1983 $50.3 $32.7 3.2 $0.4I -5.2 $17.6 I -33.4
1984 $56.8 $39.2 i 20.1 $0.0 -102.4 $17.6 j 0.2
1985 $55.9 $41.7 j 6.2 $0.6j -6187.1 $14.2 ! -19.4
1986 $86.4 $70.6 j 69.5 $0.2! -60.2 $15.8 j 11.2
1987 $136.6 $114.8 j 62.6 $1.2j 386.3 $21.8 I 38.1
1988 $164.0 $133.6 j 16.3 -$0.5j -141.1 $30.4 j 39.6
1989 $197.3 $166.5 j 24.7 -$1.1! 119.0 $30.7 j 1.0
1990 $207.5 $172.5 j 3.6 $1.8j -270.4 $34.9 i 13.4
1991 $154.1 $114.0 j -33.9 $1.3j -28.9 $39.8 i 14.3
1992 $165.9 $111.1 I -2.5 $2.8I 114.6 $53.1 I 33.2
1993 $223.3 $143.4 j 29.1 $0.2j -92.4 $76.7 I 44.6
1994 $256.0 $150.6 j 5.0 $0.9i 322.2 $103.4j 34.7
1995 $342.8 $222.5 j 47.8 $0.0j -95.3 $116.2j 12.4
1996 $390.9 $236.0 I 6.1 $0.2i 449.9 $149.0j 28.2
1997 $487.9 $285.4 j 20.9 $3.2j 1314.6 $192.1I 28.9
1998 $706.3 $508.7 i 78.3 $3.2j -1.0 $189.4j -1.4
1999$1,091.4 $852.1 ! 67.5 $12.7i 299.1 $230.7j 21.8
2000$1,400.5$1,138.0
j 33.5 $8.3j -34.7 $255.5j 10.7
2001 $827.6 $601.2 i -47.2 $6.2I -25.0 $216.9i -15.1
2002 $628.0 $443.4 i -26.2 $9.2I 48.0 $173.3i -20.1
2003 $587.0 $376.8 i -15.0 $6.3i -31.6 $190.1j 9.7
2004 $744.3 $422.2 i 12.0 $7.8i 23.6 $291.9! 53.5
2005 $980.7 $622.6 i 47.5 $2.8j -64.5 $327.2i 12.1
2006$1,463.4 $981.9 i 57.7 -$6.5j -334.4 $427.2i 30.5
2007$1,975.5$1,310.4
i 33.5 $22.5!-446.6 $574.3i 34.4
2008$1,790.7$1,019.6
i -22.2 $24.4j 8.3 $650.0i 13.2
2009$1,197.8 $606.2 I -40.5 $11.91-51.1 $519.2i -20.1
2010$1,309.0 $618.6 j 2.0 -$1.3i -110.5 $616.7i 18.8
2011$1,524.4 $747.9 i 20.9 -$1.8i 40.5 $684.4! 11.0
$3.9
$6.5 I 67.8
$5.6 j -14.5
$5.6 i 0.7
$6.1 I 8.4
$4.7 j -22.5
$7.9 i 68.1
$14.4 j 82.1
$17.4 j 20.8
$16.6 i -4.7
$21.8 I 31.8
$22.0 j 1.0
$29.8 i 35.3
$53.9 j 80.6
$66.2 j 22.9
$78.0 j 17.8
$92.4 j 18.4
$103.2j 11.7
$90.4 j -12.4
$112.0j 23.9
$144.2j 28.8
$108.7i -24.6
$95.7 I -12.0
$110.8i 15.8
$156.7i 41.4
$173.9i 11.0
$223.8j 28.7
$271.3i 21.2
$288.4i 6.3
$249.0j -13.7
$325.9i 30.9
$374.5! 14.9
$3.5 j
$5.9 j 68.5
$5.1 j -15.0
$4.7 j -7.3
$4.5 j -4.1
$2.6 j -41.9
$5.5 ! 111.6
$12.0 i 117.2
$13.9 j 15.5
$12.7 j -8.1
$18.1 j 42.4
$17.2 -5.0
$18.1 ! 4.9
$25.0 I 38.4
$30.5 j 22.1
$37.7 j 23.5
$47.3 j 25.4
$52.5 j 11.1
$41.0 1-21.9
$68.4 j 66.8
$98.6 I 44.1
$54.3 i -45.0
$32.2 i -40.6
$49.1 j 52.2
$85.4 ! 74.0
$87.1 i 2.0
$123.2i 41.4
$153.1i 24.3
$127.2i -16.9
$111.6j -12.3
$179.4I 60.8
$211.5I 17.9
UNCTADStatistics
(Source)
(2012).
391

7
J
BanoandJose
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359-398
Vol.30
N0.2,
2015,
June
Table 5. Annual FDI outflows
current
rate)
(inBillionUS dollars,
Southeast
v.
o Fot
East,
South
&
..
%
%
/o
%
%
Developing
DeveloPed
Year WorldEconomies
Janan
Growthr , Growth
economies
Growth
Southeast
Growthp Growth
ChTnaI
Asi"1
1
1
1
$0.6 j
$0.5 i
1980 $51.6 $48.4 !
$2.41
$3.2 i
1981 $51.5 $49.9 i 3.2 $4.9i 105.2 $1.6 j -50.4 $0.5 i -16.6 $0.5 -14.5
1982 $27.4 $24.8 j -50.3 $4.5i -7.2
$2.6 I 66.6 $0.9 i 94.8 $0.9 i 84.5
1983 $37.4 $35.4 I 42.6 $3.6i -20.4 $2.0 i -23.5 $1.1 i 24.0 $1.0 i 18.8
1984 $50.1 $47.7 i 35.0 $6.0i 65.1
$2.4 I 18.8 $1.7 i 52.1 $1.6 53.9
1985 $62.0 $58.1 i 21.6 $6.4I 8.0
$4.0 i 65.0 $2.8 i 66.3 $2.2 I 38.4
1986 $96.8 $91.7 I 57.9 $14.4I 123.6 $5.1 i 29.4 $3.6 I 26.5 $3.1 i 42.6
1987 $142.0 $135.3i 47.6 $20.1j 39.6
$6.7 I 31.2 $4.7 i 31.7 $42 I 35.0
26.0
76.3
1988 $182.5 $170.4;
$12.0 I 79.0 $8.6 I 82.1 $7.7 ! 83.8
$35.4j
1989 $234.1 $214.3j 25.7 $46.3; 30.5 $19.8 i 64.2 $12.3i 44.0 $11.5I 50.3
1990 $241.5 $229.6i 7.1 $50.8! 9.8
$11.9 i -39.7 $11.9i -3.5 $11.1 -4.1
1991 $198.0 $184.6i -19.6 $31.6I -37.7 $13.5 i 13.1 $8.2 j -31.0 $7.3 i -34.1
1992 $202.6 $177.9i -3.6 $17.3i -45.3 $23.2 i 71.8 $17.9! 117.6 $13.9 i 89.9
1993 $242.6 $202.2i 13.6 $13.9i -19.6 $39.3 i 69.8 $30.3i 69.5 $26.0i 87.5
1994 $286.9 $239.0! 18.2 $18.1I 30.2 $47.5 i 20.9 $39.7i 30.8 $37.6 44.6
1995 $363.2 $306.9i 28.4 $22.6i 24.9 $55.7 I 17.2 $45.9i 15.6 $43.7 I 16.4
1996 $397.8 $331.4 8.0 $23.4i 3.5
$65.4 I 17.4 $52.4I 14.3 $49.9i 14.1
$50.0I 0.2
1997 $477.5 $398.9I 20.4 $26.0I 11.0 $75.2 i 15.0 $52.8I 0.7
1998 $689.7 $638.0I 60.0 $24.2i -7.1 $50.3 j -33.1 $31.6i -40.1 $28.8i -42.4
1999 $1,088.1$1,018.4
i 59.6 $22.7i -5.8 $67.3 i 33.9 $38.9 23.0 $36.8i 27.7
2000 $1,226.6$1,088.3
j 6.9 $31.6j 38.7 $135.1i 100.6 $80.8i 107.8 $79.3i 115.7
2001 $747.7 $661.8I -39.2 $38.3i 21.5 $83.1 I -38.5 $47.9i -40.6 $39.6 I -50.0
2002 $528.5 $4763 -28.0 $323i -15.8 $47.5 i -42.9 $31.8i -33.8 $27.5 i -30.7
2003 $570.7 $5132 i 7.7 $28.8i -10.8 $46.7 i -1.7 $25.2I -20.6 $20.8i -24.3
2004 $925.7 $788.8! 53.7 $30.9I 7.5
$122.8I 163.1 $83.4i 230.5 $75.6 I 263.6
2005 $888.6 $741.7i -6.0 $45.8i 47.9 $132.5! 7.9 $74.0i -11.3 $58.2 i -23.0
2006 $1,415.1$1,152.0
i 55.3 $50.3i 9.8
$239.3I 80.6 $128.8i 74.1 $92.8i 59.6
2007 $2,198.0$1,829.6
I 58.8 $73.5I 46.3 $316.9i 32.4 $194.1 50.7 $151.5I 632
2008 $1,969.3$1,580.8
j -13.6 $128.0
j 74.1 $328.1i 3.6 $185.2i -4.6 $1133i -252
2009 $1,175.1$857.8i -45.7 $74.7i -41.7 $268.5i -182 $193.0i 4.2 $120.1i 6.0
2010 $1,451.4$989.6i 15.4 $56.3i -24.7 $400.1i 49.0 $256.6i 32.9 $1742i 45.0
2011 $1,694.4$1237.5I 25.1 $114.4;1032 $383.8i -4.1 $255.1! -0.6 $1748i 0.3
UNCTADStatistics
(Source)
(2012).
392
jei
Table 6. Foreign Direct Investmentflowsin developed and developing economies
ofworldflows)
(as percentage
Year
DevelopedEconomies
1
Inward
Outward
DevelopingEconomies
1
Inward
Outward
1980
86
94
14
1981
65
97
35
1982
55
45
10
1983
65
j
!
90
95
35
1984
69
95
31
j
!
1985
75
94
25
1986
82
95
18
1987
84
95
16
1988
81
93
19
1989
84
j
i
j
!
92
16
1990
83
95
17
1991
74
93
26
1992
67
88
32
11
1993
64
83
34
16
1994
59
j
!
83
40
17
1995
65
84
34
15
1996
60
83
38
j
1
1997
58
39
16
72
j
!
84
1998
93
27
1999
78
94
21
2000
81
89
18
j
!
11
2001
73
89
26
11
2002
71
j
!
90
28
2003
64
90
32
2004
57
85
39
2005
63
83
33
2006
67
81
2007
66
83
2008
57
2009
51
j
!
2010
47
2011
49
16
13
15
29
29
14
80
36
17
73
43
23
68
47
28
73
45
23
17
UNCTADStatistics
(Source)
(2012).
393
No.2,
2015,
Vol.30
359~398
June
BanoandJose
Tabbada
Sayeeda
Table 7. Foreign Direct Investmentflowsin developed and developingeconomies

ofGrossDomestic
(as percentage
Product)
Year
Developedeconomies
Inward
Outward
Developingeconomies
Inward
Outward
1980
0.6
0.6
0.3
0.1
1981
0.6
0.6
0.9
0.4
0.3
1.0
j
I
0.1
1982
j
!
1983
0.4
0.4
0.7
0.1
1984
0.4
0.5
0.7
0.1
1985
0.4
0.6
0.5
0.2
1986
0.6
0.8
0.6
0.2
1987
0.9
j
!
1.0
0.8
0.2
1988
0.9
1.1
0.9
0.4
1989
1.1
1.4
0.9
0.6
1990
1.0
1.3
0.9
0.3
1991
0.6
1.0
1.0
j
i
1992
0.6
1.2
0.5
1993
0.7
j
!
0.9
1.0
1.6
0.8
1994
0.7
1.1
2.0
0.9
1995
0.9
1.3
2.0
0.9
1996
1.0
j
!
1.4
2.3
1.0
1997
1.2
1.7
2.8
1.1
1998
2.2
2.7
3.0
0.8
4.1
3.6
1.0
0.1
0.3
1999
3.5
2000
4.6
4.4
3.6
1.9
2001
2.4
2.7
3.1
1.2
2002
1.7
1.8
2.4
0.7
2003
1.3
1.8
2.4
j
i
2004
1.3
2.4
3.2
1.3
2005
1.8
2.2
3.0
1.2
2006
2.8
j
i
3.2
3.4
1.9
2007
3.4
4.7
3.8
2.1
2008
2.5
3.8
3.7
1.6
2.2
3.0
j
i
1.9
2009
2010
1.5
2.4
3.0
2.0
2011
LI
Z9
Z9
1.6
UNCTADStatistics
(Source)
(2012).
394
0.6
1.6
je
Table 8. Individual countryregressions
A*Partl
(1990-2011)
Variable:Foreign
DirectInvestment
Outflow
Dependent
China
India
Indonesia
1
1
1
1
1
1
1
1
(1)
(2) (3) (4) (1)
(2)
(3) (4)
(1)
(2) (3)
(4)
!
!
!
i
!
!o.oi***!
o.oi 1-0.04
0.02 0.03**
1-0.02***
1(0.002)
I(0.001)
I(0.01)I(0.01)
I
I
I
1(0.02)!(0.01)
1
Regressor
'
GDP"
.
FDI{inflow)
FDI(inflow)i2
!
I
II!
j
I
:
^
; 0.015! 0.12
8>
j
!
g'-
jij
!
0.02***!
(0.001)1
i
I
Ill
!
Reserve
i
j
!
! -0.02
!
i(0.02)
! 0.07!
i(0.03)!
i
!
!
i
-0.02
1(0.01)
-0.13I
il
i
1(0.06)!
!
!
-8.0**
j
!(2.15)!
j
I
P '
.
F
Export*
a_
i^
I
!
I
i
i
i(0.01)i
j
io.45**lo.54*** io.34***!
0.15!
|(o.ii)|(0.04)
| (0.06)| (0.09)|
0.50***!
(003)|
1(0.03)1(0.04)
!
!
Reserve>
!
!
I
:
!
!
!
i
10.07***
j
j
j
1(0.01)
! 0.05***!0.01i
; (0.004)i(0.05)!
j
!
i
!
!
i -0.07
! -0.06**
1(0.03)!(0.02)
!
!
!
!
j
I
!
!
! 0.04i
!(0.02)!
!
!
i
!
!
I
!
I
i
I
!
!
I
!
!
!
!
!
!
!
I 0.02I 0.05*0.04***1
1(0.03)!(0.01) (0.01)!
!
!
j(0.04)!
| 0.02! 0.05
1(0.03)!(0.02)
I
iii
i-0.09***
1(0.01)
I
ili
-1.44*!
I (0.5) j
3.61j
1-4.16***1
j (0.93)1(1.78)!
1-0.09***
! (0.02)
!
I
! -.97j-2.00***
!(0.53)1(0.32)
Statistics
andJoint
Tests
Summary
F-Statistics
SER
P
1
j 133.48189.841
38.34;
j 141.89
j
j
114.02
1 37.70
5.36 I 6.41 | 4.98j 5.05 1.76 j 2.45 1.4 | 0.63 1.05 1.33j 0.85j 0.62
0.92 i 0.88 ! 0.93j 0.92 0.93 j 0.88 j 0.96; 0.99 0.65 | 0.44 0.78 0.88
20
21
19
h*
21
20
20
20
21
21
19
21
at1%,
(Notes)
(i) * denote
statistically
significant
at5%,
(ii)**denote
statistically
significant
***
denote
at10%.
(iii)
statistically
significant
395
BanoandJose
Tabbada
Sayeeda
Vol.30
No.2,
2015,
359-398
June
B. Part 2
Variable:Foreign
DirectInvestment
Outflow
Dependent
Malaysia
Philippines
(1)
(2) (3) (4)
(1) (2) (3) (4) (1)
!
!
-0.08
1-0.01
0.08***1
j
j
'
I
!
(0.01)I
1(0.06)1
1(0.01)
!
I
!
i
I
!
:
:
:
:
:
:
GDP
iii
iii
, ,
j
10.27j 0.54* 0.30**1 i" i 0.36
FDI{inflow'
i
i
j(0.34)i(0.17) (0.09)1
1(0.27)
Thailand
Regressor
FDI(inflow)r
g'
TT
Sav,n^
Saving^
eserve<
Reserven
P0rt>
r- ,
ExPort,2
a_
lij
i
j
j
iii
ill
10.16
i(0.22)j
j
j
j
i
j
iii
j0.02*
]0.004
1(0.01)1(0.08)
I
I
iji
Iii
iii
III
i0.15***
i 0.29i0.14***
j (0.01)|(0.06)|(0.01)
!
1
1-0.06
i
i(0.05)j
ii
i
i
jl
i o.oi*i
i
j(0.004)
i
i
i;;
i
j
i
i;
-619***1-344***;i-5.03***
(0.87)i (0.71)j
j (0.76)I
(2)
(3)
(4)
! -0.02i
I (0.01)i
!
! -0.03*
:
:
(o-oi)
!
!
!
iii
|
i
j
i
I
i
i
! (S I
i 0.09 i
i (0.03)j
I
i
I
;
j
j
jlioT
i (0.02)
iii
i
i 0.02 0.04***
i
i
(0.002)
1(0-04)
i 0.030.04***
(0.01)j (0.01)
; 0.05***
j
i
i
! (0.004)j
;
lo.ooi
1(0.02)
i
i
j
i
j
i
i
I
j
i
j
nn
I 01 ;
-0.79***-1.04***i-1.74*i-1.21**
I (0.16)j (0.21)i (0.45)j (0.33)
Statistics
andJoint
Tests
Summary
F-Stastics 141.14
1 131.38i
103.94
215.36j 157.65j
i 147.54
SER
1.71 i 1.75 i 2.16 1.42 0.68 i 0.70 | 0.70i 0.74 0.46 i 0.52 i 0.34 i 1.68
0.88 j 0.87 j 0.801 0.92 0.19 | 0.13 0.1310.03 0.92 j 0.89 i 0.96 ; 0.96
Number
of
; 2Q ; ^ ' 20
Observations2
21 i 21 21 21
21 i 20 i 19 i 20
at1%,
(Notes)
(i) * denote
statistically
significant
at5%,
(ii)**denote
statistically
significant
at10%.
(iii)***denote
statistically
significant
396
Jel
C. Part 3
Outflow
DependentVariable:ForeignDirectInvestment
NewZealand
Australia
(1)
Regressor
(2)
!
i
i
!
. 0.67**!
(.
tl'injlaw) (006)
j
i
SaVingj
!
g'i
Ili
'
!
j
i
j
!
(3)
-0.11 !
(0.08) j
0.68*** i
(0)
j
0.27 I
(0.51)
i
iii
Reserve.
i
i
j
'
i
!
li
i
i
i
j
! 0.09***!
! (0.02) I
1
;
!
Resen'e->
p0rt>
0.026
(0.25)
0.18
(0.36)
(1)
i
j
i
j
I 0.21 i
j (0) j
i
i
ii
I
iii
0.04 j
(0.03) i
i
j
i 0.26
I (0.13)
,
,
Export"i
i
ii!
"
I
j
!
j
6.89 ;
(8.43) j
(2)
j
!
7~
SavinS-i
Reserve<-'
(4)
-0.05
(0.03)
0.67***
(009)
!
!
I
II
!
!
0.17 I 0.18
(0.15) i (0.08)
!
i
III
i
j
i
!
i
ii
I
(4)
(3)
0.05 I
(0.03) !
0.27 I 0.42*
(017) j (013)
i .24
(.11)
-0.47 i -0.66**
(0.24) i (0.17)
i 026
(0.12)
!
i
i
!
i
j
Mn
(0.12) j
i 0.87 i
j (0.84) j
4.01
Statistics
andJoint
Tests
Summary
F-Statistics
14.59
SER
6.09 !
11.78 !
6.56
5.76
1.28 j 1.21 j 0.96 j
0.87
0.81 i
0.27 I
0.79
0.83
0.01 i 0.12 ! 0.44 |
0.56
Number
of
Observations 21
21
19
21
21
21 i
20
19
at1%,
(Notes)
(i) * denote
statistically
significant
**
at5%,
denote
(ii)
statistically
significant
***
at10%.
(iii) denote
statistically
significant
397
Tabbada
BanoandJose
Sayeeda
No.2,
2015,
359-398
Vol.30
June
Table 9. Regressions forcountrygroups

(1990-2011)
Outflow
Variable:ForeignDirectInvestment
Dependent
Developed
Group
1
1
1
Repressor
0)
(3)
(4)
(1)
_
jli
'
!
!
!
!!!
8'
!!!
! 0.27
!
I
Reserve,
'
i (0.13)
I
0.66***! j
jo.73***
FDKinflow)
i
i (0.06)
(0.04)!
zz
17
i
;
i
I
!
j
SaV,ng-<
Reserve.-'
7~
Saving<
i
~
Reserve,-i
~
p0rt>
I!
1-0.07***
0.070***1 1-0.089***1-0.104***
I (0.01) (0.01)!
I (0.02)I (0.02)
I
i0.418***
!o.23***!
0.356***!
0.278!0.453***
j
!
(0.05)
(0.05)
(0.05)
(0.01)
| (0.05)
j
j
j
j
i
i
i
j.i***
i
i
! (0.001)
i
;
iii
i
!
i
i -0.095
-0.03***
j
!
i
i
1(0.01)
1(0.014)!
i
j (0.02)
0.08***
1(0.01)!
!
|-0.52***0.03***j !
i
j
|(0.14) (0.001)
j
j
Iii
j
iii
iii
i
i 0.15
i (0.06)
I
|i|
0*35
iii
i
j
j (0.14)
iii
j
Iii
i
I
!
j
|0.08***|
I (0.01)|
I
I
a_
i
!
Whole
Group
Group
Developing
1
1
1
1
1
(4)
(1)
(2)
(3)
(4)
(2)
(3)
!
!
i0.03***
i
0.03***
0.008
!0.03***i
i
1(0.01)
!
!
1(0-003)(0.004)i(0.004)
i
Ili
-0.108***! !
i
(0.02)
!
!
!
i
I
I
I ' "
I
lili
|j
10.12***
1(0.01)
III
III
|-1.81***|
(0.50)j
I
j
1437.667-
i 0.0690.128***0.120***
! (0.01)| (0.03)j (0.03)
0.008**
O.035***!
i
i0-004)
ii
i (o.oi)
!
1-0.149***1-0.149***
I
I (0.02)i (0.02)
i
I .086**
1.108***
(-03) i (.03)
ii
-0.017
-0.03***|-0.034|-0.024**|
(0.01)|(0.008)|(0.01)I (0.01)
-1-061
III
j
j
j (0-64)
j
andJoint
Tests
Statistics
Summary
F-Statistics
73.226
iii
SER
4.416I 8.379j 8.733| 3.913 3.475j 4.184| 5.084| 2.520 5.024 5.113| 4.465 4.417
P
0.822j 0.360I 0.336j 0.873 0.873j 0.815| 0.715| 0.936 0.708| 0.710| 0.788j 0.793
Numberof
168 i 160 i 152 152
42 i 42 i 40 i 38
100 i 100 i 105 95
Observations
i
S
S
iii
iii
'
'
'
at1%,
(i) * denote
(Notes)
statistically
significant
at5%,
(ii)**denote
statistically
significant
***
at10%.
(iii) denote
significant
statistically
398

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Foreign Direct Investment Outflows : Asian Developing Countries

Author(s): Sayeeda Bano and Jose Tabbada

ForeignDirect Investmentoutflowshave so farbeen confinedto a limitednumberof

It was once assumed thatForeign Direct Investment(FDI) naturallyflows from

Table 1. Multinationals fromdeveloping countries

(i) Describe outwardFDI fromdeveloping countries:theirmajor countrysources,

What drives outwardFDI in developing countries?More specifically,what are

This sectionpresentsevidence on FDI inflowsand outflowsas well as FDI stocks

trends and patterns

Developing-country inflows and outflows were on an upward trend during

Figure 1. Foreign direct investmentflowsin developing economies

Figure 3. FDI in developingeconomiesas percentageof grossfixedcapital formation

Figure 5. FDI flowin developed economies as percentage of GDP

countriesin inwardFDI stock increasedfrom57% in 1980 to 75% in 1990 and then

and South Asia

How may theFDI trends,patternsand tendenciesobservedin theprecedingsections

sources of substantialoutwardFDI, also have a strongtradeorientationindicatedby

To test the hypothesizedrelationships,we performedcorrelationand regression

Table 2. Correlation analysis

FDI and FDI and GDP

FDI and FDI and FDI and

! 0.948** | 0.902** j 0.860**

| 0.935** | 0.930** j 0.968**

0.902** | 0.907** j 0.656*

All Countries 0.917** '0.912** j

| 0.959** j 0.882** 0.446

Ordinaryleast squares regressionwas used to testthe econometricrelationshipand

The resultsshow thatthe most significantfactorsaffectingoutwardFDI in the six

In orderto capturethepatternsand othercharacteristics

E. Results for individual

dollars,FDI outflowsin thefollowingyeardecreaseby about2 millionUS dollars.This

correlatedwitheach other(e.g., the correlationbetweenChinese GDP and savings is

F. Results for country groups

foreignreserves,capital abundancefromhighdomesticsavingsratesand inwardFDI,

betweenoutwardFDI and domesticsavings,

To succeed in the international

Encourage and supportthe formationof industryclusters.Globally-competitive

Received28 June2013, Revised8 October2014, Accepted20 April2015

World Bank. "World DevelopmentIndicators."Accessed June29, (2014). http://data.

Table 4. Annual growthof FDI inflow

Table 7. Foreign Direct Investmentflowsin developed and developingeconomies

1.28 j 1.21 j 0.96 j

0.01 i 0.12 ! 0.44 |

Table 9. Regressions forcountrygroups

Você também pode gostar

! 0.948 | 0.902 j 0.860**

| 0.935 | 0.930 j 0.968**

0.902 | 0.907 j 0.656*

All Countries 0.917 '0.912 j

| 0.959 j 0.882 0.446