The nexus between outward foreign direct investment and exports: evidence from developing countries

Madiha Gohar, Lingyan Xu, Iskandar Muda, Hajra Ihsan and Ayesha Mustafa

Revista CEPAL, 2024

Abstract: This research analyses how outward foreign direct investment (OFDI) by emerging nations affects the investing countries’ exports, examining the diversity in this relationship by categorizing developing nations by income (low-income, lower-middle-income and upper-middle-income) and by region (Africa, Asia and the Pacific and Latin America and the Caribbean). The research uses fixed and random effects on unbalanced data from 64 developing nations between 1990 and 2019. The results show that export performance in developing countries is significantly enhanced by OFDI. There is a supplementary impact of OFDI on exports from the middle-income and upper-middle-income classes of emerging nations. Results at the regional level show that this additional impact is greater in Asia and the Pacific than in other developing regions. In Latin America and the Caribbean, conversely, OFDI substitutes for domestic exports, and the region’s contribution to total global OFDI is smaller and more variable than that of other regions.

Date: 2024-08
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Persistent link: https://EconPapers.repec.org/RePEc:ecr:col070:81138

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