A novel study on OFDI and home country exports: implications for the ASEAN region
| Published date | 06 June 2016 |
| DOI | https://doi.org/10.1108/JCEFTS-06-2016-0016 |
| Pages | 131-145 |
| Date | 06 June 2016 |
| Author | Fayyaz Ahmad,Muhammad Umar Draz,Su-Chang Yang |
| Subject Matter | Economics,International economics |
A novel study on OFDI and home
country exports: implications for
the ASEAN region
Fayyaz Ahmad
School of Economics, Lanzhou University, Lanzhou, China
Muhammad Umar Draz
Department of Management and Humanities,
University Technology Petronas, Bandar Seri Iskandar, Malaysia, and
Su-Chang Yang
School of Economics, Lanzhou University, Lanzhou, China
Abstract
Purpose – This study aims to examine the effects of outward foreign direct investment (OFDI) on the
home country exports for selected ASEAN countries during 1981-2013.
Design/methodology/approach – The authors have used OLS regression based on the unit root
analysis, correlation technique and a series of specication tests applied to annual time series data.
Findings – The results reveal that the complementary effects of OFDI on exports of the home country
outweigh the substitution effects for four ASEAN countries. Furthermore, trade openness, currency
uctuations and inward foreign direct investment (FDI) are also important factors for progressive home
country exports.
Originality/value – This study provides a thorough analysis of the links between OFDI and exports
of the home country on a macro level. With a data set of more than three decades from the ASEAN
region, this study is the rst attempt of its kind to analyze the relationship of these two variables on the
aggregate level.
Keywords ASEAN, OFDI, Home country exports, Trade openness
Paper type Research paper
1. Introduction
In recent years, the home country effects of foreign direct investment (FDI) phenomena
have reemerged in a new form. In the past, the outward foreign direct investment (OFDI)
was mainly associated with rms that originated from developed countries. Recently,
however, the growing importance of OFDI from emerging Asian economies has
stimulated researchers to explore the impact of OFDI on developing countries and more
broadly on their home economies. Foreign involvement is a function of competitive
advantage preserved by an individual rm. This, in turn, is subject to two sets of factors:
(1) First, the external factors pertain to the individual country and facilitate
operations, such as external economies of scale. Such factors characterize the
level of development the countries have attained.
(2) Second, the particular internal factors refer to the organization and management
skills rms apply to acquire, train and develop specic internal advantage in
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OFDI and
home country
exports
131
Journalof Chinese Economic and
ForeignTrade Studies
Vol.9 No. 2, 2016
pp.131-145
©Emerald Group Publishing Limited
1754-4408
DOI 10.1108/JCEFTS-06-2016-0016
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