Outward Foreign Direct Investment and Home Country Sustainable Development, Studies in Trade, Investment and Innovation No. 93

Asia and the Pacific has now become the largest source of foreign direct investment globally. This is due to the growing number of firms from Asia and the Pacific that have become active outward investors. The upsurge in outward foreign direct investment (OFDI) from Asia and the Pacific raises several unanswered questions, including how can OFDI stimulate positive developmental outcomes in home countries? What types of activities and associated variables, inter alia size, type, direction, and sector of investment yield the most significant sustainable development outcomes for home countries? What bottlenecks do Asia-Pacific countries face in stimulating and benefiting from OFDI? What mechanisms and policies are in place and/or needed for OFDI to provide developmental benefits to the home economy? To answer these questions, this study focuses on exploring the potential of OFDI to stimulate sustainable development outcomes in home economies in the Asia and Pacific region. In doing so, it provides an overview of the OFDI trends in the Asia-Pacific region; conceptually links OFDI home country effects with the Sustainable Development Goals; empirically assesses the existence of home country effects in selected Asia-Pacific countries; outlines a non-exhaustive list of home country measures, i.e. policy measures and institutional arrangements, that home countries can put in place to leverage OFDI for their respective country’s sustainable development; and provides a case study analysis of the home country measures currently in place and planned in three developing countries in the ASEAN subregion.