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Outward Foreign Direct Investment and Economic Development

Author

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  • Bhanu K.V. Murthy

    (Department of Commerce, Delhi School of Economics)

Abstract

Outward Foreign Direct Investment (OFDI) is in the nature of international relocation of production. OFDI acts as a complementary input in the host country and hence aims at rational allocation of global resources. The pattern of economic development on a multilateral scale would, thus, determine the pattern of OFDI. We consider the effect of economic development on OFDI from developing countries with a set of socio-economic variables. Using the Principal Component Analysis, we construct a set of six composite indices, namely, human resource, infrastructure, labor, market, trade openness and resource, as determinants of OFDI. We use a Panel Regression approach both in terms of OFDI stock and flow. The period of study is 1990-2009. The empirical results indicate that developing countries outflow has not been growing significantly. Although, in growth terms, top ten countries indicate a significant growth rate of 8 percent per annum. Infrastructure is a single variable whose elasticity is slightly over one in the case of top ten countries and is highly significant. Therefore, the FDI outflow is going from those countries amongst developing countries that have a significant infrastructure base.

Suggested Citation

  • Bhanu K.V. Murthy, 2015. "Outward Foreign Direct Investment and Economic Development," Transnational Corporations Review, Ottawa United Learning Academy, vol. 7(3), pages 279-296, September.
    • Handle: RePEc:oul:tncr09:v:7:y:2015:i:3:p:279-296
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    Cited by:

    1. Priniti Panday, 2020. "Women’s Empowerment and the Well-being of Children in Nepal," Journal of Developing Societies, , vol. 36(2), pages 129-154, June.
    2. Artjoms Ivlevs, 2019. "Adverse Welfare Shocks and Pro‐Environmental Behavior: Evidence from the Global Economic Crisis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(2), pages 293-311, June.
    3. Koopman, Eline & Wacker, Konstantin M., 2023. "Drivers of growth accelerations: What role for capital accumulation?," World Development, Elsevier, vol. 169(C).
    4. Priniti Panday & Deanna Rackie & Maria Cornachione Kula, 2020. "The status of women and its influence on children’s well‐being: Do geography, religion and income matter? A comparative study," Development Policy Review, Overseas Development Institute, vol. 38(6), pages 766-782, November.
    5. Boker Poumie & Dounya Matsop Claude, 2021. "Does Foreign Capital Really Matter for Employment? Evidence from Agricultural Dominance African Countries," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 9(2), pages 88-104, June.
    6. Chen, Lili & Guo, Shaoyu & Lu, Jian & Gerschewski, Stephan, 2021. "Outward FDI and efficiency in within-firm resource allocation – Evidence from firm-level data of China," Journal of Asian Economics, Elsevier, vol. 74(C).
    7. Khoso, Noor Ahmed & Rajput, Sheraz & Aziz, Tariq & Hussain, Akseer & Jahanzeb, Agha, 2021. "Trade Openness and Income Inequality: Fresh Evidence Based on Different Inequality Measures," Asian Journal of Applied Economics, Kasetsart University, Center for Applied Economics Research, vol. 28(2).
    8. Pásztor, Szabolcs, 2019. "Gondolatok a fejlesztési segélyek negatív hatásairól P. T. Bauer szellemi örökségének tükrében [Some thoughts on the negative effects of development aid in terms of P. T. Bauers Intellectual Legacy," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 1093-1120.
    9. DIARRA, Setou & LEBIHAN, Laetitia & MAO TAKONGMO, Charles Olivier, 2018. "Polygyny, Child Education, Health and Labour: Theory and Evidence from Mali," MPRA Paper 88518, University Library of Munich, Germany.
    10. Selamawit G. Kebede & Almas Heshmati, 2020. "Energy Use and Labor Productivity in Ethiopia: The Case of the Manufacturing Industry," Energies, MDPI, vol. 13(11), pages 1-21, May.
    11. Áron Perényi & Miklós Losoncz, 2018. "A Systematic Review of International Entrepreneurship Special Issue Articles," Sustainability, MDPI, vol. 10(10), pages 1-26, September.

    More about this item

    Keywords

    Outward foreign direct investment; globalization; economic development; multiple regression analysis;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F6 - International Economics - - Economic Impacts of Globalization
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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