Abstract
Research background: The last four decades have witnessed an upsurge of multi-nationals from emerging markets alongside a narrowed gap in growth prospects between developed and emerging economies. UNCTAD statistics show that FDI flows from emerging economies have gone steady since 1980 and occupied more than one fifth of global FDI stock in 2015. Japan led the reverse FDI trend when it started to invest abroad in the 1960s and 1970s. Two decades later, in the 1980s-1990s, the reverse FDI trend was continued by so-called Asian tigers, then recently by those rapidly-industrializing economies in Southeast Asia as well as China and India in East and South Asia.
 Purpose of the article: The main goal of this paper is to contribute empirically to the study of the determinants of FDI outflows from emerging economies.
 Methods: In order to derive empirically testable hypotheses this paper refers to theoretical Knowledge-Capital model developed by Markusen (2002). The model is estimated using the Poisson-Pseudo Maximum Likelihood estimation technique. The specific research hypotheses derived from the theory are verified using a panel dataset of 38 home emerging countries and 134 host countries over the period 2001?2012.
 Findings & Value added: In this paper, we distinguish between horizontal and vertical reasons for FDI. Our estimation results support the hypothesis that main-stream theory of multinational enterprise can explain FDI flows from emerging economies, implying the significant roles of total market size, skilled-labor abundance, investment cost, trade cost as well as geographical distance between two countries.
Highlights
The last four decades have witnessed an upsurge of multinational enterprises (MNEs) from emerging markets alongside a narrowed gap in growth prospects between the advanced and the less advanced economies
The UNCTAD statistics show that FDI flows from emerging economies have gone steady since 1980 and occupied more than one fifth of global FDI stock in 2015 (UNCTAD, 2017)
The main hypothesis to be addressed in this paper is whether modern mainstream theories that explain FDI activity of MNEs from developed countries are able to account for investment decisions of their counterparts from emerging economies or not
Summary
The last four decades have witnessed an upsurge of multinational enterprises (MNEs) from emerging markets alongside a narrowed gap in growth prospects between the advanced and the less advanced economies. Japan led the reverse FDI trend when it started to invest abroad in the 1960s and 1970s. In the 1980s–1990s, the reverse FDI trend was continued by so-called Asian tigers, recently by those rapidly-industrializing economies in Southeast Asia as well as China and India in East and South Asia, respectively. A number of theories and empirical studies have attempted to identify the determinants of reverse FDI. The literature addressing this topic is still at an early stage of development and consists of a handful of studies on a very limited number of countries, not revealing the big picture. The main hypothesis to be addressed in this paper is whether modern mainstream theories that explain FDI activity of MNEs from developed countries are able to account for investment decisions of their counterparts from emerging economies or not
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