Kueh, Swee Hui Jerome and Puah, Chin Hong and Liew, Venus Khim-Sen (2010): Selected Macroeconomic Determinants of Foreign Direct Investment Outflow of Singapore.
Download (235kB) | Preview
The 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.
|Item Type:||MPRA Paper|
|Original Title:||Selected Macroeconomic Determinants of Foreign Direct Investment Outflow of Singapore|
|English Title:||Selected Macroeconomic Determinants of Foreign Direct Investment Outflow of Singapore|
|Keywords:||FDI outflow, trade openness, vector error correction model|
|Subjects:||F - International Economics > F1 - Trade > F10 - General
F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment; Long-Term Capital Movements
C - Mathematical and Quantitative Methods > C2 - Single Equation Models; Single Variables > C22 - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
|Depositing User:||Jerome Kueh|
|Date Deposited:||19. Oct 2010 08:06|
|Last Modified:||15. Feb 2013 21:46|
Chenery, H. B., Robinson, S. & Syrquim, M. 1986. Industrialisation and Growth: Comparative Study. Oxford University Press, New York, NY.
Dickey, D. A. & Fuller, W. A. 1981. Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root. Econometrica, 49, 1057-1072.
Dunning, J. H. 1993. Multinational Enterprises and the Global Economy. Workingham: Addison-Wesley.
Gopinath, M., Pick, D. and Vasavada, U. 1998. Exchange Rate Effects on the Relationship between FDI and Trade in the U.S. Food Processing Industry. American Journal of Agricultural Economics, 80, (5), 1073-79.
Grubaugh, S. J. 1987. Determinants of Foreign Direct Investment. Review of Economics and Statistics, 69, (1), 149-152.
Huff, W.G. 1994. The Economic Growth of Singapore: Trade and Development in the Twentieth Century, Cambridge: Cambridge University Press.
Hymer, S.H. 1976. The International Operation of National Firms: A Study of Foreign Direct Investment. MIT Press, Cambridge, Mass.
International Monetary Fund. International Financial Statistics. Various issues. Washington, D.C.: IMF.
Johansen, S. & Juselius, K. 1990. Maximum Likelihood Estimation and Inference on Cointegration – With Application to the Demand for Money. Oxford Bulletin of Economics and Statistics, 52, 169-210.
Kanai, T. 1993. Singapore’s New Focus on Regional Business Expansion, NRI Quarterly, 2, 18-41.
Kogut, B. 1983. Foreign Direct Investment as a Sequential Process. In C.P. Kindleberger & D.P Audretsh (Eds.), The Multinational Corporations in the 1980s. Cambridge, MA: MIT Press.
Kohlhagen, S. W. 1977. The Effect if Exchange-Rate Adjustments on International Investment: Comment. In P.B. Clark, D.E. Logue and R.Sweeney (eds.) The Effect of Exchange Rate Adjustments, US Government Printing Office: Washington, DC, 194-197.
Kyrkilis, D. & Pantelidis, P. 2003. Macroeconomic Determinants of Outward Foreign Direct Investment. International Journal of Social Economics, 30, (7), 827-836.
Lall, S. 1980. Monopolistic Advantages and Foreign Involvement by US Manufacturing Industry. Oxford Economic Papers, 32, 102-122.
Perry, M., Kong, L. and Yeoh, B. 1997. Singapore: A Development City-State, London: John Wiley.
Prugel, T. A. 1981. The Determinants of Foreign Direct Investments: An Analysis of US Manufacturing Industries. Managerial and Decisions Economics, 2, 220-228.
Regnier, P. 1993. Spreading Singapore’s Wing Worldwide: A Review of Traditional and New Investment Strategies. The Pacific Review, 6, 305-312.
Scaperlanda, A. 1992, ‘Direct Investments Controls and International Equilibrium: The US Experience’, Eastern Economic Journal, 18, 157-170.
Scaperlanda, A. and Balough, R. 1983, ‘Determinants of US Direct Investment in the EEC Revisited’, European Economic Review, 21, 381-390.
Stevens, G. V. G. 1993, ‘Exchange Rate and Foreign Direct Investment: A Note’, International Finance Discussion Papers, No.444, Board of Governors of the Federal Reserve System, Washington, DC.
The Global Enabling Trade Report 2009, World Economic Forum.
UNCTAD 2005. World Investment Report 2005: Transnational Corporations and the Internationalization of R&D. Switzerland: United Nations.
UNCTAD 2008. World Investment Report 2005: Transnational Corporations and the Infrastructure Challenge. United Nations: New York and Geneva.
Wu, F., Toh, M. H. and Ho, T. 2003. Outward Foreign Direct Investment and Its Impact on the Home Economy: The Case of Singapore. Journal of Asian Business, 19, (3), 27-48.