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Accounting for Outward Direct Investment from Hong Kong and Singapore: Who Controls What?

In: Geography and Ownership as Bases for Economic Accounting

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  • Linda Low
  • Eric D. Ramstetter
  • Henry Wai-Chung Yeung

Abstract

After a brief introduction and examination of the economic rationale for accounting for foreign direct investment (FDI), we survey information on outward investors from Hong Kong and Singapore with the aim of illuminating the implications of accounting for such FDI by geographical source or by country of ultimate beneficial owner. By any measure it is clear that a large part of FDI from these economies comes from foreign-controlled firms and hence that ownership-based estimates of FDI from these two economies would be much smaller than the standard, geography-based estimates. However, because outward investment by foreign firms in Hong Kong and Singapore often involves sub- stantial contributions from local staff and partners, an attempt is made to examine the extent of control over investment decisions exercised by these local staff and partners. Case studies from Hong Kong indicate a tendency for for local control over investment decisions to be relatively strong in 4 types of foreign-controlled Hong Kong firms, recently acquired firms, firms with strong local entrepreneurial involvement, customer-oriented firms, and relocated holding companies. On the other hand, evidence froma sample of Thai affiliates of foreign-controlled Hong Kong or Singapore investors suggested that many of the investors were acting as part of an integrated network of foreign investors. Thus, although it is clear local staff and partners have a large influence over the investment decisions of foreign-controlled outward investors in Hong Kong and Singapore, it does not appear that such firms are a majority among foreign-controlled investors in these economies.
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Suggested Citation

  • Linda Low & Eric D. Ramstetter & Henry Wai-Chung Yeung, 1998. "Accounting for Outward Direct Investment from Hong Kong and Singapore: Who Controls What?," NBER Chapters, in: Geography and Ownership as Bases for Economic Accounting, pages 139-172, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:6819
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    1. Hill H., 1991. "Multinationals and employment in Indonesia," ILO Working Papers 992826083402676, International Labour Organization.
    2. repec:ilo:ilowps:282608 is not listed on IDEAS
    3. W-C H Yeung, 1994. "Hong Kong Firms in the ASEAN Region: Transnational Corporations and Foreign Direct Investment," Environment and Planning A, , vol. 26(12), pages 1931-1956, December.
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    Cited by:

    1. Hiro Lee & Dominique van der Mensbrugghe, 2001. "A General Equilibrium Analysis of the Interplay between Foreign Direct Investment and Trade Adjustments," Discussion Paper Series 119, Research Institute for Economics & Business Administration, Kobe University, revised Jul 2001.
    2. Rabin Hattari & Ramkishen Rajan, 2010. "India as a Source of Outward Foreign Direct Investment," Oxford Development Studies, Taylor & Francis Journals, vol. 38(4), pages 497-518.
    3. Gnanaraj Chellaraj & Keith E. Maskus & Aaditya Mattoo, 2013. "Labor Skills and Foreign Investment in a Dynamic Economy: Estimating the Knowledge-capital Model for Singapore," Review of Development Economics, Wiley Blackwell, vol. 17(4), pages 627-643, November.
    4. Lipsey, Robert E. & Sjöholm, Fredrik, 2011. "South–South FDI and Development in East Asia," Asian Development Review, Asian Development Bank, vol. 28(2), pages 11-31.
    5. Evgeny Vinokurov, 2014. "Emerging Eurasian Continental Integration," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 6(1), pages 69-93, January.
    6. Vinokurov, Evgeny, 2014. "Emerging Eurasian Continental Integration: Trade, Investment and Infrastructure," MPRA Paper 62027, University Library of Munich, Germany.
    7. Helen Simpson, 2007. "Investment abroad and adjustment at home: evidence from UK multinational firms," IFS Working Papers W07/07, Institute for Fiscal Studies.
    8. Helen Simpson, 2012. "How do Firms’ Outward FDI Strategies Relate to their Activity at Home? Empirical Evidence for the UK," The World Economy, Wiley Blackwell, vol. 35(3), pages 243-272, March.
    9. Sjöholm, Fredrik, 2013. "Foreign Direct Investments in Southeast Asia," Working Papers 2013:37, Lund University, Department of Economics.
    10. Gnanaraj Chellaraj & Aaditya Mattoo, 2009. "Can the Knowledge-Capital Model Explain Sectoral Foreign Invesment? Evidence From Singapore," Economics Study Area Working Papers 101, East-West Center, Economics Study Area.

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