Effects of outward FDI on home‐country export competitiveness

Abstract

PurposeThe purpose of this paper is to examine the effects of outward foreign direct investment (O‐FDI) on the competitiveness of home‐country export.Design/methodology/approachThis paper employs a six‐year data set from Taiwanese manufacturing data for 15 industries over the period between 1991 and 2007.FindingsThe authors find that exports in Taiwan are positively associated with O‐FDI by Taiwanese firms. This finding supports the view that outward FDI complements home country exports and concurs with the majority of earlier empirical findings which focus on developed home countries. The authors also find that such effect is stronger for Taiwanese FDI in China than in other countries and in traditional sectors than in modern sectors.Originality/valueThese findings suggest that location‐and industry‐specific characteristics moderate the strength of the relationship between O‐FDI and home country exports.