The determinants of the outward foreign direct investment of China and India: Whither the home country?
The current study examines the relationships between several home country-specific macroeconomic factors and the level of the outward FDI of China and India using multiple time-series data from 1982 to 2006 and from 1980 to 2006, respectively. With the use of a vector autoregressive model assessing the causal relationships of the endogenous variables, the empirical research proves that Chinese national characteristics associated with income per capita, openness of the economy to international trade, interest rate, human capital, technological capability, exchange rate and exchange rate volatility do not Granger cause the level of outward FDI of China. By contrast, the national technological capability of India Granger causes their level of outward FDI. The level of outward FDI of China does not Granger cause any of the home country-specific macroeconomic factors considered, while the level of outward FDI of India Granger causes their national interest rate.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (31) (0)43 3883875
Fax: (31) (0)43 3216518
Web page: http://www.merit.unu.edu/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jie Q. Guo & Pravin K. Trivedi, 2002. "Firm-Specific Assets and the Link between Exchange Rates and Japanese Foreign Direct Investment in the United States: A Re-examination," The Japanese Economic Review, Japanese Economic Association, vol. 53(3), pages 337-349.
- Joshua Aizenman & Ilan Noy, 2005.
"FDI and Trade – Two Way Linkages?,"
200505, University of Hawaii at Manoa, Department of Economics.
- Jaya Prakash Pradhan, 2004. "The determinants of outward foreign direct investment: a firm-level analysis of Indian manufacturing," Oxford Development Studies, Taylor & Francis Journals, vol. 32(4), pages 619-639.
- Deepak Nayyar, 2008. "The Internationalization of Firms From India: Investment, Mergers and Acquisitions," Oxford Development Studies, Taylor & Francis Journals, vol. 36(1), pages 111-131.
- Bonaglia, Federico & Goldstein, Andrea & Mathews, John A., 2007. "Accelerated internationalization by emerging markets' multinationals: The case of the white goods sector," Journal of World Business, Elsevier, vol. 42(4), pages 369-383, December.
- Liu, Hong & Li, Kequan, 2002. "Strategic Implications of Emerging Chinese Multinationals:: The Haier Case Study," European Management Journal, Elsevier, vol. 20(6), pages 699-706, December.
- Hawawini, Gabriel & Subramanian, Venkat & Verdin, Paul, 2004.
"The home country in the age of globalization: how much does it matter for firm performance?,"
Journal of World Business,
Elsevier, vol. 39(2), pages 121-135, May.
- Gabriel Hawawini & Venkat Subramanian & Paul Verdin, 2004. "The home country in the age of globalization: how much does it matter for firm performance?," ULB Institutional Repository 2013/14190, ULB -- Universite Libre de Bruxelles.
- Dunning, John H & Buckley, Peter J, 1977. "International Production and Alternative Models of Trade," The Manchester School of Economic & Social Studies, University of Manchester, vol. 45(4), pages 392-403, December.
- Wheeler, David & Mody, Ashoka, 1992. "International investment location decisions : The case of U.S. firms," Journal of International Economics, Elsevier, vol. 33(1-2), pages 57-76, August.
- Henry Wai-chung Yeung (ed.), 2006. "Handbook of Research on Asian Business," Books, Edward Elgar, number 3543, March.
- Louis T. Wells, 1983. "Third World Multinationals: The Rise of Foreign Investments from Developing Countries," MIT Press Books, The MIT Press, edition 1, volume 1, number 026273169x, June.
- B Elango & Chinmay Pattnaik, 2007. "Building capabilities for international operations through networks: a study of Indian firms," Journal of International Business Studies, Palgrave Macmillan, vol. 38(4), pages 541-555, July.
- Kravis, Irving B. & Lipsey, Robert E., 1982.
"The location of overseas production and production for export by U.S. multinational firms,"
Journal of International Economics,
Elsevier, vol. 12(3-4), pages 201-223, May.
- Irving B. Kravis & Robert E. Lipsey, 1980. "The Location of Overseas Production and Production for Export by U.S. Multinational Firms," NBER Working Papers 0482, National Bureau of Economic Research, Inc.
- Stephen B Tallman, 1988. "Home Country Political Risk and Foreign Direct Investment in the United States," Journal of International Business Studies, Palgrave Macmillan, vol. 19(2), pages 219-234, June.
- Kojima, Kiyoshi, 1973. "A Macroeconomic Approach to Foreign Direct Investment," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 14(1), pages 1-21, June.
- Low Sui Pheng & Jiang Hongbin, 2006. "Analysing ownership, locational and internalization advantages of Chinese construction MNCs using rough sets analysis," Construction Management and Economics, Taylor & Francis Journals, vol. 24(11), pages 1149-1165.
- Culem, Claudy G., 1988. "The locational determinants of direct investments among industrialized countries," European Economic Review, Elsevier, vol. 32(4), pages 885-904, April.
- Krishna Kumar & Kee Young Kim, 1984. "The Korean Manufacturing Multinationals," Journal of International Business Studies, Palgrave Macmillan, vol. 15(1), pages 45-61, March.
- Qin, Jie, 2000. "Exchange Rate Risk and Two-Way Foreign Direct Investment," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 5(3), pages 221-31, July.
- Rui, Huaichuan & Yip, George S., 2008. "Foreign acquisitions by Chinese firms: A strategic intent perspective," Journal of World Business, Elsevier, vol. 43(2), pages 213-226, March.
- Song Zan Chiou Wei & Zhen Zhu, 2007. "A revisit to the outward FDI determinants: further evidence from count panel data models with fixed effects," Applied Economics Letters, Taylor & Francis Journals, vol. 14(11), pages 809-812.
- Pantelis Pantelidis & Dimitrios Kyrkilis, 2005. "A cross country analysis of outward foreign direct investment patterns," International Journal of Social Economics, Emerald Group Publishing, vol. 32(6), pages 510-519, June.
- Ghosh Indradeep, 2007. "The Relation between Trade and FDI in Developing Countries -- A Panel Data Approach," Global Economy Journal, De Gruyter, vol. 7(3), pages 1-32, October.
- Chittoor, Raveendra & Ray, Sougata, 2007. "Internationalization paths of Indian pharmaceutical firms -- A strategic group analysis," Journal of International Management, Elsevier, vol. 13(3), pages 338-355, September.
- Peter J Buckley & L Jeremy Clegg & Adam R Cross & Xin Liu & Hinrich Voss & Ping Zheng, 2007. "The determinants of Chinese outward foreign direct investment," Journal of International Business Studies, Palgrave Macmillan, vol. 38(4), pages 499-518, July.
- Wolf, Bernard M, 1977. "Industrial Diversification and Internationalization: Some Empirical Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 26(2), pages 177-91, December.
- Li, Peter Ping, 2007. "Toward an integrated theory of multinational evolution: The evidence of Chinese multinational enterprises as latecomers," Journal of International Management, Elsevier, vol. 13(3), pages 296-318, September.
- Russ, Katheryn Niles, 2007. "The endogeneity of the exchange rate as a determinant of FDI: A model of entry and multinational firms," Journal of International Economics, Elsevier, vol. 71(2), pages 344-372, April.
- Randall Morck & Bernard Yeung & Minyuan Zhao, 2008. "Perspectives on China's outward foreign direct investment," Journal of International Business Studies, Palgrave Macmillan, vol. 39(3), pages 337-350, April.
- Pradhan, Jaya Prakash, 2005. "Outward Foreign Direct Investment from India: Recent Trends and Patterns," MPRA Paper 12358, University Library of Munich, Germany.
- Garg, Miti & Delios, Andrew, 2007. "Survival of the foreign subsidiaries of TMNCs: The influence of business group affiliation," Journal of International Management, Elsevier, vol. 13(3), pages 278-295, September.
- Kogut, Bruce & Chang, Sea Jin, 1991. "Technological Capabilities and Japanese Foreign Direct Investment in the United States," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 401-13, August.
- Paulgeorg Juhl, 1979. "On the sectoral patterns of West German manufacturing investment in less developed countries: The impact of firm size, factor intensities and protection," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 115(3), pages 508-521, September.
- John Cantwell, 1987. "The Reorganization of European Industries After Integration: Selected Evidence on the Role of Multinational Enterprise Activities," Journal of Common Market Studies, Wiley Blackwell, vol. 26(2), pages 127-151, December.
- Bolling, H. Christine & Shane, Mathew & Roe, Terry L., 2007. "Exchange Rates and U.S. Foreign Direct Investment in the Global Processed Food Industry," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 36(2), October.
- Chakrabarti, Avik, 2001. "The Determinants of Foreign Direct Investment: Sensitivity Analyses of Cross-Country Regressions," Kyklos, Wiley Blackwell, vol. 54(1), pages 89-113.
- Deng, Ping, 2004. "Outward investment by Chinese MNCs: Motivations and implications," Business Horizons, Elsevier, vol. 47(3), pages 8-16.
- Lall, Sanjaya, 1980. "Monopolistic Advantages and Foreign Involvement by U.S. Manufacturing Industry," Oxford Economic Papers, Oxford University Press, vol. 32(1), pages 102-22, March.
- Nachum, L. & Rolle, J. D., 1999. "Home country and firm-specific ownership advantages: A study of US, UK and French advertising agencies," International Business Review, Elsevier, vol. 8(5-6), pages 633-660, October.
- Daniel Pick & Utpal Vasavada, 1998. "Exchange Rate Effects on the Relationship between FDI and Trade in the U.S. Food Processing Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(5), pages 1073-1079.
- George J. Georgopoulos, 2008. "Cross-border mergers and acquisitions: does the exchange rate matter? Some evidence for Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 41(2), pages 450-474, May.
- Blonigen, Bruce A, 1997. "Firm-Specific Assets and the Link between Exchange Rates and Foreign Direct Investment," American Economic Review, American Economic Association, vol. 87(3), pages 447-65, June.
- Baek, H. Young & Kwok, Chuck C. Y., 2002. "Foreign exchange rates and the corporate choice of foreign entry mode," International Review of Economics & Finance, Elsevier, vol. 11(2), pages 207-227, May.
- Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
- Ferrantino, Michael J., 1992. "Transaction costs and the expansion of Third-World multinationals," Economics Letters, Elsevier, vol. 38(4), pages 451-456, April.
- Grubaugh, Stephen G, 1987. "Determinants of Direct Foreign Investment," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 149-52, February.
When requesting a correction, please mention this item's handle: RePEc:unm:unumer:2008049. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ad Notten)
If references are entirely missing, you can add them using this form.