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.

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

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

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.

Obstacles to OFDI

Drivers and motivation of OFDI

Asian corporations have led the field in investing abroad.

OFDI from Singapore Trends and development

Drivers and motivations of Singapore OFDI

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

Policy measures that support OFDI 13

OFDI and enterprise competitiveness

Recent trends in OFDI from developing countries

There is notable OFDI from Argentina.

OFDI from Singapore Trends and development 4

Impact of OFDI on competitiveness of Singaporean enterprises 14

Much of African OFDI takes place in neighbouring countries.

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

Support has continued to the World Association of Investment Promotion Agencies (WAIPA), which includes 46 investment promotion agencies from Africa as members.

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).

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

OFDI and enterprise competitiveness 11

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.

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.

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

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

The importance of the creation of the Proinversión agency in 2002 was stressed.

Promoting OFDI Key laws and regulations

One is that Governments have been supporting FDI outflows.

Impact of investing abroad on enterprise competitiveness Selected cases an indicators

) 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.

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.

A total of 233 representatives from 91 IPAs were attending this week's WAIPA conference.

(ii) Mr. Douglas Cruikshark, USAID Trade Facilitation and Investment Project

Internationalization of Developing Country Enterprises

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

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

Work has started to define priorities for establishing institutions needed for private sector development, including an investment promotion agency (a priority).

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

OFDI needs to be regarded as part of a developing country's strategy.

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.

The drivers of OFDI from developing countries fall into two broad groups