Selected Macroeconomic Determinants of Foreign Direct Investment Outflow of Singapore
AbstractThe role of Foreign Direct Investment (FDI) outflow has become significant and essential for sustainable economic growth in Southeast Asia region particularly Singapore. The saturation of the domestic resources accumulation and as export-led regime, the government of Singapore introduced the regionalization policy in the 1990s to encourage abroad investment. Due to that, this study aims to investigate the determinants of Singapore FDI outflows from the perspective of selected macroeconomics variables namely income, trade openness, interest rate and exchange rate. This study adopted the Johansen and Juselius cointegration test and Granger causality based on vector error correction model to investigate the annually data from 1975 to 2007. Empirical results indicated that FDI outflow of Singapore is positively associated with income while inverse linkage with trade openness, interest rate and exchange rate in the long run. Moreover, exchange rate has the tendency to have greater influence towards the FDI outflow of Singapore in relative to the other determinants. Meanwhile, income, trade openness and interest rate portrayed causality linkage towards FDI outflow of Singapore, except for exchange rate in the short run. The continuous commitment towards economic integration in the East Asia region via the Free Trade Area has further contributed to the expansion of FDI outflow of Singapore in the future.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 25920.
Date of creation: Jun 2010
Date of revision:
FDI outflow; trade openness; vector error correction model;
Other versions of this item:
- Kueh, Swee-Hui Jerome & Puah, Chin-Hong & Liew, Khim-Sen, 2010. "Selected Macroeconomic Determinants of Foreign Direct Investment Outflow of Singapore," MPRA Paper 25940, University Library of Munich, Germany.
- F10 - International Economics - - Trade - - - General
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
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