Determinants of Taiwan's outward investment in Southeast Asia: Economic factors and institutional issues

Thu‐Ha Thi An and Kuo‐Chun Yeh

Pacific Economic Review, 2023, vol. 28, issue 4, 465-502

Abstract: This paper investigates the economic and institutional determinants of Taiwan's outward direct investment in six Southeast Asian countries from 1998 to 2017, applying the panel ARDL–Pooled Mean Group estimation. We specially examine the effects of institutional quality with five dimensions inclusively, using the Worldwide Governance Indicators. The results show the locational economic factors are the primary determinants in the long run. The tight and historic trading relation with Southeast Asia has a long‐run positive effect. On the contrary, the institutional quality of the host countries has strong positive effects in both the long run and short run. Further, the paper displays the dynamics of this investment in the last 20 years. These results are important for Taiwan and Southeast Asia policy‐makers in setting up the short‐run and long‐run policies to sustain their diversified economic growth.

Date: 2023
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https://doi.org/10.1111/1468-0106.12348

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