New Horizons in International Business series
Edited by John R. McIntyre, Silvester Ivanaj, Vera Ivanaj and Rabi N. Kar
Chapter 3: Push factors causing outward FDI from select Asian economies: is sustainability a concern?
A rich and in-depth body of knowledge exists on the beneficial aspects of foreign direct investment (FDI) for host countries. In the earlier literature on the subject, many theories of FDI (Hymer  1976; Dunning, 1977, 1981) have identified developed nations as the source countries of FDI. Traditionally, developing nations have played the role of host countries, attracting FDI from industrialized economies and leveraging it toward accelerating economic development and alleviating poverty. Eminent theorists and researchers have developed various theories spanning from market imperfection (Hymer  1976) to the ownership, location and internalization (OLI) (Dunning, 1977, 1981) paradigm to explain this phenomenon of FDI emanating from a developed nation to a developing one. However, the last two decades have witnessed the emergence of a new phenomenon whereby many developing countries have become important source countries for outward FDI (OFDI). Until the 1980s, more than 90 per cent of global OFDI originated from the developed countries. However, since the early 1990s, developing countries have seen a rapid growth in their outward investments. Firms from developing countries, particularly those from the Asian region, have registered their arrival at an international level in a shorter span of time as compared to their competitors from the industrialized world. The share of South, East and Southeast Asia in global OFDI increased from less than 1 per cent in 1980 to almost 10 per cent in 2004 (UNCTAD, 2005).
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