Impact of domestic investment, market size, and trade openness on outward fdi: A panel data analysis on brics

Title

Impact of domestic investment, market size, and trade openness on outward fdi: A panel data analysis on brics

Creator

Mathad K.; Kumar D.N.S.

Description

The recent phenomenal increase in the outward foreign direct investment (FDI) of emerging countries has raised concerns among policymakers. One school of thought argues that when multinational firms relocate production facilities abroad, it reduces the likelihood of concurrent investments in the home country, resulting in reduced domestic output. In this case, the outward FDI would harm the domestic investments. The other argues that the outward FDI would be more advantageous for the domestic investment when firms internationalize for entering into new markets and/or to import intermediate goods, wherein outward investments boost the returns in the home country, leading to a positive impact of outward FDI on domestic investment. The influence of the outward FDI on the domestic investment of any country or a region state cannot be generalized as each country is unique, and the drivers of investments would differ for different countries at the different development phases of each country. An attempt was made in this study to empirically trace the impact of the domestic investment, market size, and trade openness of the BRICS's members on the BRICS's outward FDI as a group. The results of the panel least square method highlighted that the variables - domestic investment and trade openness of BRICS had a positive effect on the outward FDI; whereas, the market size of BRICS was inversely related to outward FDI of BRICS. The data were tested for stationarity and Hausman test validated the results. 2019, Associated Management Consultants Pvt. Ltd.. All rights reserved.

Source

Indian Journal of Finance, Vol-13, No. 12, pp. 7-18.

Date

2019-01-01

Publisher

Associated Management Consultants Pvt. Ltd.

Subject

BRICS; Domestic Investment; Market Size; Outward FDI; Panel Data; Trade Openness

Coverage

Mathad K., Institute of Management, CHRIST (Deemed to be University), Bangalore, 560 029, India; Kumar D.N.S., Centre for Research-Projects, CHRIST (Deemed to be University), Bangalore, 560 029, India

Rights

Restricted Access

Relation

ISSN: 9738711

Format

Online

Language

English

Type

Article

Identifier

https://doi.org/10.17010/ijf/2019/v13i12/149265

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