China’s One Belt, One Road (OBOR) initiative has attracted worldwide attention, and a solid foundation for the initiative has been laid at home and in the neighbouring regions of Southeast Asia. While many countries may not have imagined the possibility of reviving the Silk Route, China has not only coined the term OBOR but also taken steps to bring it close to reality. Despite the various challenges posed by the initiative to their national strategies and to the regional security order, developing countries along the OBOR have an opportunity to improve connectivity and transform their economic conditions by exploring complementarities through trade, investment and greater people-to-people exchanges. From the South Asian point of view, OBOR presents multiple opportunities as well as dilemmas. The puzzles need to be addressed to shape the connectivity agenda of the region and to harness the benefits of integration, which may require joint development and sharing of responsibility among economically stronger countries. Greater cooperation among South Asian countries will be critical in shaping the connectivity agenda, through OBOR or otherwise, in the South Asian region.

This article examines various home country determinants of outward FDI from developing economies, which have received limited attention in empirical studies. The role of home country determinants is investigated for a large sample of developing economies, as against a handful of developing economies, for the most recent period, 1996–2010, using a panel data econometric framework. The results indicate that source country’s level of economic development, globalisation, political risk and science and technology investments contribute significantly to outward FDI from developing countries. While outward FDI might be unavoidable in the course of economic development and globalisation, developing countries need to emphasise improving political governance in order to prevent capital outflow arising out of high domestic political risk. On the flip side, science and technology investments could contribute to higher outward FDI, thereby yielding complementary benefits of internationalisation in the long-run. Thus, given the evolving role of developing countries in the global economic scenario, a balance between domestic and international investments is crucial for them to harness the benefits of globalisation, which can be achieved through suitable governance and policy reforms in specific fields.

Purpose -The purpose of this paper is to examine the motivations behind Indian firms' outward investment, i.e. whether these firms are investing abroad in search of market, resource, technology, strategic-assets, efficiency, etc. Outward FDI by Indian firms has increased considerably in recent years. Such investments have gone to more than hundred host countries and into various sectors. The higher volume of outward FDI following policy reforms requires examination of factors that have motivated Indian firms to invest in different host countries. Design/methodology/approach -The empirical analysis is done for the period from 2008-2009 to 2011-2012 using firm-destination panel data with appropriate adjustment for clustering. Findings -The analysis provides evidence of the existence of multiple motives behind such investments. Indian firms are found to have invested abroad in search of resource, technology (strategic-assets) and efficiency, whereas the evidence on market-seeking motive is found to be at best weak in the empirical analysis. The results are robust to the use of alternative sample of outward investing firms. Practical implications -This analysis of firm-level motivation of outward FDI by Indian multinationals has pertinent policy implications as well. The presence of multiple motives implies that Indian firms could bring multiple benefits to the Indian economy through outward FDI. Originality/value -The link between outward FDI and host country factors is examined at the firm level as against at the aggregative level using a comprehensive and unique official database on actual outward FDI made by Indian firms, originating from both manufacturing and non-manufacturing sectors, in the form of equity and loan.

PurposeThe Indian economy has experienced a boom in outward FDI (OFDI) in 2006. The study aims at exploring the factors that drive the boom in OFDI of Indian firms.Design/methodology/approachThe participation of a firm in OFDI is a two-stage process -first, the decision to internationalization and second, how much to invest. We employ a two-stage model to decompose the effects on the decision to internationalization from effects on how much to invest. The two-stage model has the advantage of allowing us to estimate separately the probability of internationalization by a firm – Pr(OFDI > 0) – and the expected volume of investment, E(OFDI|OFDI > 0). The former is estimated by the probit model and the latter is estimated by the ordinary least square model.FindingsThe study finds that prior experience and institutional advantage can strongly drive the internationalization of Indian multinationals. The study also examines the relative importance of two aspects of prior knowledge – length of prior knowledge and depth of prior knowledge on OFDI of Indian firms. The study finds that the depth of prior knowledge is a must influential driver of OFDI in comparison to its length.Originality/valueThe present study is a novel attempt to investigate, ‘What drives the boom in OFDI from India?’

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