Determinants of Taiwan Outward Foreign Direct Investment in ASEAN: Market, Regulative and Normative Factors

The announcement of the ASEAN Economic Community (AEC) in 2003, to transform ASEAN into the single market and production base of free flow of goods, services, investment, capital, and skilled labor. A huge market size of the AEC could be attractive for an even larger amount OFDI investment from Taiwan. However, Taiwan facing the shrink of the economic growth rate from 2000 onwards, it is thus important to identity the factors attracting Taiwan OFDI in ASEAN. This paper aims to study the determinants of Taiwan OFDI in ASEAN. A panel of six ASEAN-5 and Vietnam are selected for the period 2001 to 2012. Using the pooled ordinary least squares (POLS) method, the results shown that the economic determinants of market size and trade openness, and the institutional determinants of economic freedom, rule of law, and cultural distance are significantly attracting Taiwan OFDI.