Outward Foreign Direct Investment

This report analyzes how emerging market firms upgrade their capabilities to become leading global competitors, suggesting the use of foreign investments as an upgrading mechanism in global value chains. The report introduces a typology of global value chain upgrading strategies based on two dimensions: the type of global value chain expansion followed by the emerging market firm (repetition or extension), and the governance relationships between emerging market firms and advanced country lead firms (collaborators or autonomous).

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?