What Drive Foreign Direct Investment from the South?

As response to increasing Foreign Direct Investment outflow by developing economies, this paper reviewed theories and empirical studies to figure out what drives the phenomenon. Besides adopting wisdoms from literature, limitations and unsatisfying parts of former works have also been discussed. Therefore, an alternative explanation for FDI has been formed. Based the theoretical model, the share of Greenfield in Outward Foreign Direct Investment(OFDI) reflects the structure of an economy’s OFDI. The higher the share of Greenfield is, the more the economy inclines to be interested in technology transfer; and the lower the share of Greenfield is, the more the economy inclines to be interested in technology acquisition. Furthermore, Fixed Effect model has been applied on panel dataset. The result of econometric test supports the theoretical framework. Finally, by using data of share of Greenfield in OFDI, a detailed comparison reveals that technology transfer is more popular in developing economies. Several big developing economies are changing close to the structure of developed economies, but most developing economies are still the same even more distant from convergence.