Outward FDI by Singapore: a different animal?

Singapore’s outward foreign direct investment is unique in important respects, even though it shares some characteristics with foreign direct investment undertaken by traditional investor countries. The focus of this investment on manufacturing in lower-income Asian host countries suggests that the motivations and trade repercussions of Singapore’s foreign direct investment differ from those of such investment undertaken by major industrialized countries. We apply basic gravity models in order to investigate the relationship between Singapore’s outward foreign direct investment and trade and, thereby, to assess whether the concern that outward foreign direct investment has adverse labour market implications are economically founded. We do not find that Singapore’s foreign direct investment has replaced exports, but the balance-of-payments effects differ considerably across manufacturing industries