Climbing the economic ladder: the role of outward foreign direct investment

Lim, Guanie; Teo, Jie Khan

doi:10.1080/17516234.2018.1449714

Cited by 8 publications

(3 citation statements)

References 67 publications

(76 reference statements)

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“…Last but not least, outward FDI can be characterised by the investment of private or public individual firms in foreign countries to expand beyond domestic borders via green-field, alliance or acquisition (Garcia, Jin & Salomon, 2012). The purpose for a country to do so might because they want to learn from the overseas investment and capture value for themselves and other firms in home countries (Lim & Teo, 2019). The country might also motivate to exploit the opportunity granted by foreign markets (Dunning, 1993).…”

Section: Literature Reviewmentioning

confidence: 99%

The Impacts of Bilateral Trade and Foreign Direct Investment on Malaysia’s Economic Growth: The Roles of Singapore

Wong

Lee

Chong

2021

IJBS

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Open economy is essential for a country to achieve sustainable economic growth. There existsa bilateral tiebetween Malaysia and Singapore since 1965. Thisrelationship has made Singaporeachievedas a high-income nation that enjoys modern infrastructure and technology, skilled labour, and strong financial structure, but Malaysia is still trying to upgrade itself to become a high-income nation via open economy. Furthermore, Malaysia’s reliance on the external market has inevitablyleft the economy to be more exposed to external shock. This research analysesthe impacts of Malaysia’s bilateral trade and investment with Singapore on Malaysia’s economic growth from2008 to 2016. Vector error correction model (VECM) reveals that Malaysia’s exports to Singapore arepositive and significant on Malaysia’s economic growth and Malaysia’s OFDI in Singapore is significant but negative on Malaysia’s economic growth.However, Malaysia’s imports from Singapore and Malaysia’s inward foreign direct investment (IFDI) by Singapore have insignificant impacts on Malaysia’s economic growth. It concludes that only Malaysia’s exports to Singapore can help to increase Malaysia’s economic growth.Thus,Malaysia’sgovernment couldprovide incentives to encourage Malaysian local firms to boost the exportationsto Singapore.

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Section: Literature Reviewmentioning

confidence: 99%

The Impacts of Bilateral Trade and Foreign Direct Investment on Malaysia’s Economic Growth: The Roles of Singapore

Wong

Lee

Chong

2021

IJBS

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“…Therefore, impact of inward FDI has been widely discussed and well documented. On the contrary noticeably fewer study has been directed on the impact of outward foreign direct investment (OFDI) in home country (Lim & Teo, 2018). OFDI also documented as ODI (Outward direct investment) or DIA (Direct investment abroad).…”

Section: Introductionmentioning

confidence: 99%

A Review on Impact of OFDI in Malaysia as a Home Country Since Malaysian Firms Going Global: Time to Accelerate or Slowdown

Hira¹,

Othman²,

Ho³

et al. 2019

IJAREMS

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This paper goals to explore the role of global expansion of MNCs and impact of outward foreign direct investment (OFDI) on home county from Malaysian perspective. This study brought together the insights from previous studies on impacts of OFDI on home country benefit. Search was limited within paper published between 2010 to 2019 with special focus on OFDI in impact on development on Malaysia. Nevertheless, the study discloses the investment development path (IDP) theory hypothetically supports internationalization of Malaysian local firms as MNCs (Multinational Corporation) to conduct business activities overseas.

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“…2.1 | Ownership structure and Chinese OFDI Compared to Western OFDI, Chinese OFDI exhibits distinct characteristics including state intervention and reliance on a network of ethnicity-and reciprocity-based social and business ties, a cultural system known as guanxi (Buckley et al, 2018;Karreman et al, 2017). The Chinese state influences the internationalization of the country's MNEs through a wide range of mechanisms including foreign exchange regulation, financial support and subsidies, and policies that encourage the internationalization of investments (Gaur et al, 2018;Hu et al, 2019;Lim & Teo, 2019;Tuman & Erlingsson, 2020). Reflecting these direct and indirect state interventions, Chinese SOEs have played an instrumental role in the rapid development of Chinese OFDI, with their overseas investment activities occasionally influenced by the state's economic and political objectives.…”

mentioning

confidence: 99%

The rise of Chinese foreign direct investment in the United States: Disentangling investment strategies of state‐owned and private enterprises

Jiang

Bennett

2020

Growth and Change

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Over the last two decades, China's outward foreign direct investment (OFDI) has expanded rapidly. The country is now the world's second-largest source of OFDI. China is often viewed as a monolithic investor, however, without sufficient attention to the differences between investments by state-owned enterprises (SOEs) and private enterprises (PEs). To shed light on the internal complexity and heterogeneity of Chinese OFDI, we construct a panel dataset of investments in the U.S. across the 50 states and Washington, D.C. from 2005 to 2017, which we analyze using a spatial autoregressive model. We find clear evidence that the ownership structure of Chinese firms affects investment strategy and entry mode. Statistical analysis indicates that SOEs are more likely to pursue greenfield investment motivated by market-seeking and resource-seeking objectives, while PEs pursue mergers and acquisitions in order to obtain strategic assets. We also detect a positive and significant relationship between the presence of Chinese overseas communities and OFDI, with the strength of the correlation depending on ownership structure. Finally, we find that Chinese OFDI is spatially dependent, meaning that investments flow to states where they are already concentrated nearby. | 1563 HE Et al. 1 | INTRODUCTION Globally, outward foreign direct investment (OFDI) from emerging economies is rising, and China's multinational enterprises (MNEs) are playing a key part in this expansion (Alon et al., 2018). Since the early 2000s, driven by the Chinese state's "Go Global" policy, Chinese OFDI has reshaped the global economic landscape (Buckley, 2019; Lee, 2018). In 2018, the total value of OFDI from China reached US$143 billion, making the country the world's second-largest source of FDI (World Bank, 2020). Chinese OFDI initially expanded in the late 1990s as state-owned enterprises (SOEs), with their ample domestic strategic assets and support of the government, began looking abroad to invest (Gaur et al., 2018). In contrast to profit-seeking MNEs headquartered in advanced market economies, Chinese MNEs tend to be more state-directed or at the very least state-influenced. With substantial government backing, SOEs have historically dominated Chinese OFDI (Buckley, 2019; Deng, 2007). State support has allowed many Chinese MNEs to address ownership-specific disadvantages and engage in investment activities in environments that private firms might consider too politically risky (Buckley, 2019; Lu et al., 2018; Ramasamy et al., 2012). Yet, in recent years, Chinese OFDI has shifted from government-driven investment by central SOEs to more market-driven investment by private enterprises (PEs) (Li & Hendrischke, 2019). As Chinese firms, particularly privately owned ones, seek to expand abroad, they may turn to other sources of assistance apart from the Chinese government. Historically, by offering various forms of support, backing, and guarantees, Beijing has helped internationalizing Chinese firms to overcome obstacles in host countries such as informat...

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Climbing the economic ladder: the role of outward foreign direct investment

Cited by 8 publications

References 67 publications

The Impacts of Bilateral Trade and Foreign Direct Investment on Malaysia’s Economic Growth: The Roles of Singapore

The Impacts of Bilateral Trade and Foreign Direct Investment on Malaysia’s Economic Growth: The Roles of Singapore

A Review on Impact of OFDI in Malaysia as a Home Country Since Malaysian Firms Going Global: Time to Accelerate or Slowdown

The rise of Chinese foreign direct investment in the United States: Disentangling investment strategies of state‐owned and private enterprises

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