IFDI, OFDI, and divestment: a global level analysis

Santosh Kumar Sahu and Prantik Bagchi ()
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Prantik Bagchi: Madras School of Economics

Journal of Social and Economic Development, 2023, vol. 25, issue 1, No 5, 72-100

Abstract: Abstract Using the World Bank’s data, we explain factors related to divestment using various limited dependent models. For the robustness of our estimated models, we also use sub-sample analysis. Reducing profit margin will likely increase divestment, supporting the reverse FDI theory. Trade, political instability, non-performing loans, and R&D significantly influence divestment. A paradoxical result is found for trade, posing a serious question of whether liberalization is better or worse for the economy. Higher investment in innovation increases the possibility of divestment, which may be a reason for shifting the R&D investment to product development. Energy intensity, corruption, population exposure to higher pollution, and higher income and energy-importing countries seem to have influenced specific measures' divestment.

Keywords: Divestment; Profitability; Reverse FDI theory; Corruption; Energy intensity (search for similar items in EconPapers)
JEL-codes: F38 G01 G28 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s40847-023-00260-1

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