Home-country effects of outward foreign direct investment: A systematic review of empirical and policy evidence

This article offers a first aggregated insight on the merits and risks of outward foreign direct investment (OFDI) for the economies and development of home countries, based on a systematic review of 130 empirical studies. The review finds strong evidence for the prevalence of eight home-country effects, with 71 % of studies reporting a positive impact on home countries. Several influencing factors were found to affect the magnitude of these effects. We also find that many governments facilitate OFDI through home-country measures, suggesting that they consider OFDI to be beneficial. Yet, this is a latecomer area of inquiry, with some effects under- or not investigated, and the impact of home-country measures has yet to be conclusively studied. A reversed analytical perspective focusing on OFDI as an activity aimed at generating financial and other worthwhile and beneficial returns that manifest themselves as home-country effects can considerably enrich FDI research. • Outward foreign direct investment (OFDI) generates at least eight types of effects in home countries. • These home-country effects of OFDI are primarily positive. • Several influencing factors affect the magnitude of home-country effects. • Government measures can facilitate the generation of home-country effects. • A reversed perspective on FDI can support the analysis of OFDI and its home-country effects.