The Directionality of Outward FDI and Its Determinants: Findings From Asian Emerging Countries

Abstract

This study investigates the determinants of outward foreign direct investment (OFDI) for eight emerging Asian source countries vis-à-vis 107 host countries from 2009 to 2016. We employ Bayesian model averaging and the weighted average least squares technique to address the problem of model uncertainty. Our findings reveal that the OFDI position of Asian emerging countries targets developed countries for market- and asset-seeking purposes, emerging countries for market seeking, and most resource-seeking investments are directed to other developing countries.

A nexus between intra-ASEAN outward FDI, intra-ASEAN exports and economic growth of ASEAN-10: evidence using panel causality analysis

“…These findings support the previous assumption that intra-ASEAN OFDI and intra-ASEAN exports are becoming increasingly important as a regional production base. In the literature, Rehman and Ding (2020) and Behera et al (2020) complement our findings, stating that there is a causal relationship between exports and OFDI. Moreover, the robust evidence of the causality between intra-ASEAN exports and the real GDP of ASEAN-10 countries is bi-directional, implying not only intra-ASEAN export trade is regarded as an important growth engine for the regional economy, but also, regional economic growth is also a driver of intra-regional exports.…”

“…These findings support the previous assumption that intra-ASEAN OFDI and intra-ASEAN exports are becoming increasingly important as a regional production base. In the literature, Rehman and Ding (2020) and Behera et al. (2020) complement our findings, stating that there is a causal relationship between exports and OFDI.…”

“…The empirical question of whether OFDI tends to promote trade/growth and vice versa is normally investigated using data at the firm level (such as Svensson, 1996;Head and Ries, 2001;Lim and Moon, 2001;Yu et al, 2019), industry level (such as Lipsey and Weiss, 1984;Chow, 2012;Kang, 2012), country level (such Pfaffermayr, 1994Lin, 1995;Kim and Rang, 1997;Bajo and Montero, 2001;Zhang and Daly, 2011;Goh et al, 2013;Wong and Goh, 2013;Lin, 2016;Ma et al, 2019;Rehman and Ding, 2020;Wu and Chen, 2019;Zhang and Chen, 2020;Amin and Anwar, 2020;Abdulsalam et al, 2021), cross-country level (such as Bhasin, 2016;Herzer, 2010;Mohanty andSethi, 2019, Li, 2019;Bhasin and Kapoor, 2020;Behera et al, 2020) [3]. In summary, these studies do not achieve consensus and the scope of these studies is mostly limited to country-based analyses.…”

“…, 2013; Wong and Goh, 2013; Lin, 2016; Ma et al. , 2019; Rehman and Ding, 2020; Wu and Chen, 2019; Zhang and Chen, 2020; Amin and Anwar, 2020; Abdulsalam et al ., 2021), cross-country level (such as Bhasin, 2016; Herzer, 2010; Mohanty and Sethi, 2019, Li, 2019; Bhasin and Kapoor, 2020; Behera et al. , 2020) [3].…”