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Determinants of outward FDI from emerging economies


  • Andrzej Cieslik

    () (University of Warsaw, Poland)

  • Giang Hien Tran

    () (Mekong Development Research Institute, Vietnam)


Research background: The last four decades have witnessed an upsurge of multi-nationals from emerging markets alongside a narrowed gap in growth prospects between developed and emerging economies. UNCTAD statistics show that FDI flows from emerging economies have gone been going steady since 1980 and occupied more than one fifth of global FDI stock in 2015. Japan led the reverse FDI trend when it started to invest abroad in the 1960s and 1970s. Two decades later, in the 1980s-1990s, the reverse FDI trend was continued by so-called Asian tigers, then recently by those rapidly-industrializing economies in Southeast Asia as well as China and India in East and South Asia. Purpose of the article: The main goal of this paper is to contribute empirically to the study of the determinants of FDI outflows from emerging economies. Methods: In order to derive empirically testable hypotheses this paper refers to theoretical Knowledge-Capital model developed by Markusen (2002). The model is estimated using the Poisson-Pseudo Maximum Likelihood estimation technique. The specific research hypotheses derived from the theory are verified using a panel dataset of 38 home emerging countries and 134 host countries over the period 2001–2012. Findings & Value added: In this paper, we distinguish between horizontal and vertical reasons for FDI. Our estimation results support the hypothesis that main-stream theory of multinational enterprise can explain FDI flows from emerging economies, implying the significant roles of total market size, skilled-labor abundance, investment cost, trade cost as well as geographical distance between two countries.

Suggested Citation

  • Andrzej Cieslik & Giang Hien Tran, 2019. "Determinants of outward FDI from emerging economies," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 14(2), pages 209-231, June.
  • Handle: RePEc:pes:ierequ:v:14:y:2019:i:2:p:209-231
    DOI: 10.24136/eq.2019.010

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    Cited by:

    1. Sri Indah Nikensari & NFD Puspitasari & Amin Pujiati, 2020. "Demand and Strategy of Imports in Declining Foreign Exchange Reserves," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 96-110.
    2. Wiesława Lizinska & Roman Kisiel & Alina Zrobek-Rozanska, 2020. "Foreign Direct Investment in Poland and Changes in the Branch Structure," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 201-214.
    3. Irawan Soerodjo, 2020. "Joint Venture as a Model of Cooperation in the Infrastructure Projects in Indonesia," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 396-401.

    More about this item


    foreign direct investment (FDI); knowledge-capital (KC) model; emerging multinationals; Pseudo-Poisson maximum likelihood (PPML);

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business


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