Obstacles to OFDI

Drivers and motivation of OFDI

Does OFDI increase competitiveness of firms and how could competitiveness from OFDI be measured?

Policy measures that support OFDI 13

OFDI and enterprise competitiveness

) To the extent that these agreements protect investment and open up industries for FDI, they facilitate OFDI from developing countries.

FDI by SMEs involved evaluation of investment locations based on a set of variables which could be clustered under markets, costs, natural resources, infrastructure framework, policy framework and business promotion and support factors.

Recent trends in OFDI from developing countries

Much of African OFDI takes place in neighbouring countries.

Some experts stressed that policies had been traditionally oriented to attract FDI and were not really defined as promoting outward FDI.

OFDI from Singapore Trends and development

Drivers and motivations of Singapore OFDI

Promoting OFDI Key laws and regulations

One is that Governments have been supporting FDI outflows.

OFDI and enterprise competitiveness 11

Its OFDI stock reached 29 billion in 2004 and accounted for 67 per cent of the region's OFDI stock (see table 1).

OFDI from the BRIC countries Brazil, Russia, India and China is now growing rapidly and looks set to dominate OFDI activity from developing countries in the future (Sauvant 2005).

Internationalization of Developing Country Enterprises

There is notable OFDI from Argentina.

How can OFDI benefit economic development? How does OFDI affect enterprise competitiveness, and how can it be measured?

OFDI from Singapore Trends and development 4

Impact of OFDI on competitiveness of Singaporean enterprises 14

These institutional frameworks are perhaps more effective in supporting OFDI than are OFDI incentives per se.

Examples of the latter could include provisions aimed at enterprise development, OFDI promotion programmes and outbound investment missions in conjunction with investment promotion authorities.

Meanwhile, outward foreign direct investment yields 20 annually, on average.

Impact of OFDI on competitiveness of Singapore enterprises

African OFDI is mainly from South Africa. SMEs from Uganda are investing abroad, facilitated by a joint venture arrangement with TNCs, in response to competition and to strengthen trade channels.

Following is a discussion of the main OFDI trends and players.

Third, the Singapore Government plays a significant role in promoting OFDI.

The main factors that motivate firms from the South to invest abroad are similar to those that motivate FDI from developed countries.

Table 2. Singapore OFDI stock, by industry and activity abroad, 1990, 1995, 2000, 2002, 1990 2002

More importantly, developing country (home) governments can enhance the ability and capacity of their countries' enterprises, particularly SMEs, to internationalize through OFDI.

In the case of China, OFDI approval procedures have been simplified and the Investment Promotion Agency, established under the Ministry of Commerce, provides support in helping Chinese enterprises to invest abroad.

Conclusion 18

To describe the nature and trends of OFDI by indigenous Singaporean enterprises

To examine key laws and regulations that enhance Singapore's OFDI.

This note surveys current trends in OFDI from developing countries. It examines the drivers, motivations and obstacles of OFDI, its impact on enterprise competitiveness, and policy options.

Internationalization of enterprises through OFDI was increasing, and there was a need to analyse the characteristics of that development.

Other supportive measures include streamlining OFDI approval procedures and the conditions governing equity ownership of affiliates abroad.

As their operations are less visible, it is likely that their outward FDI, and therefore China s total, is understated.

In this regard, OFDI is likely to complement home country production.

What are the best company practices in the area of OFDI, and what are their key success factors?

Table 1. Singapore OFDI stock, by geographical distribution, 1981 2003

The Government also provides various facilitative measures in promoting OFDI.

The financial sector continues to spearhead Singapore's OFDI.