ABSTRACT
Traditionally, Singapore is known to be a safe haven for FDI by TNCs. In recent years, Singapore has emerged as a capital-exporting nation. This chapter argues that outward direct investment from Singapore is due to the changes in the price of factor inputs which influences firms’ ability to maximise profit. It is assumed that if the present growth rate of Singapore’s investments abroad is maintained until the year 2000, cumulative FDI outflow will be about four to six times the size of inflow. This could have a devastating impact on Singapore s economy considering the fact that it relies heavily on FDI in sustaining future growth. Finally, it is argued that the relative strengths of Singapore’s investment abroad is reflected in its ability within the Asia region and its weakness is shown in its inability to venture into unfamiliar markets.
