Exports and outward FDI: are they complements or substitutes? Evidence from Asia
Abstract
Purpose
Outward foreign direct investment (OFDI) and its relationship with exports of home country is an important aspect of internationalization having implications for both policymakers and multinational enterprises (MNEs). This paper aims to examine this relationship by using panel data for ten major emerging countries from Asia over the period 1991-2012.
Design/methodology/approach
The authors use panel vector auto regression, panel cointegration and causality tests in this study.
Findings
The authors find evidence of long-run causality from exports to OFDI. Further, exports and OFDI are found to be substitutes. There is no long-run causality from OFDI to exports, implying that MNEs are not “connecting” with home country firms through backward and forward linkages in the production process.
Originality/value
To the best of the authors’ knowledge, this is the first paper to deal with the relationship of OFDI with exports of the home country, for a group of developing/emerging countries.
Keywords
Citation
Bhasin, N. and Paul, J. (2016), "Exports and outward FDI: are they complements or substitutes? Evidence from Asia", Multinational Business Review, Vol. 24 No. 1, pp. 62-78. https://doi.org/10.1108/MBR-05-2015-0016
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited