The determinants of outward foreign direct investment from ASEAN

Purpose of Study: This study investigates the determinants of ASEAN outward foreign direct investment (OFDI) and the extent to which the four general motives of OFDI (market seeking, efficiency-seeking, resource-seeking, strategic-assets-seeking) can explain the phenomenon in the four chosen ASEAN countries (Malaysia, Singapore, Thailand and Indonesia).

Methodology: We used panel data from 2001 – 2016 and the Tobit regression model to ascertain the results. We found that each country possibly has slightly different motives between each other although market seeking is seen as the general motive. As most of the previous studies focused on other developing countries such as BRICS, this study contributes to the small but growing literature of ASEAN economies. Furthermore, the usage of the Tobit regression Model helps us in explaining the variables with zero value, hence yielding a more informative result.

Results: We found that, in general, some determinants were consistent with findings in the literature, while others need further investigation. Lastly, based on the findings, we can conclude that the mainstream theory of outward FDI applies to ASEAN.