In particular, the Thai Exim Bank and the Board of Investment have been providing facilities (e.g. information, outward investment missions) to help Thai firms venture abroad.

There are limits to outward investment, lack of insurance for outward investment, and exchange rate controls.

Asian corporations have led the field in investing abroad.

Indian equity participation is largely majority owned.

Outward foreign direct investment by Indian small and medium sized enterprises

Obstacles to OFDI

Reasons for OFDI now include, apart from seeking markets, to acquire strategic assets like technology, marketing and brand names, and establish trade supporting networks.

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

Drivers and motivation of OFDI

The relaxation of exchange controls and the significant liberalization of OFDI policies in the 1990s played an important role in encouraging Indian enterprises to invest abroad.

Impact of investing abroad on enterprise competitiveness Selected cases an indicators

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.

Policy measures that support OFDI 13

OFDI and enterprise competitiveness

The increasing competitive pressure at home and abroad, and the liberalization of OFDI, played an important role in driving Indian OFDI.

Recent trends in OFDI from developing countries

Much of African OFDI takes place in neighbouring countries.

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

However, these enterprises face a number of challenges in investing overseas.

China is providing investment insurance and tax breaks to companies that invest abroad.

In terms of outward FDI policies, several developing countries have established outward investment agencies (OIAs), whose primary function is to promote and facilitate investment abroad by helping domestic enterprises develop international business links and pursue overseas business opportunities.

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

Drivers and motivations of Indian OFDI

OFDI policy regime and SMEs

OFDI and enterprise competitiveness 11

India's OFDI policy regime, 1978 2004

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

The additional risks of investing and operating in a foreign country have hampered OFDI by developing country firms, as have the lack of information on overseas investment opportunities and the lack of access to finance.

Indian enterprises have been investing abroad for a long time, but it is only in recent years that Indian OFDI has become more notable.

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.

Policy considerations that support OFDI

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

Roto Pumps Ltd, in particular, used OFDI strategy to build marketing and warehouses overseas.

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

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

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).

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

) 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.

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?