ABSTRACT
This chapter is an attempt to provide a theoretical framework on overseas direct investment from Singapore. Three major theories of FDI are examined: the neoclassical microeconomic theory; the intangible microeconomic theory; and the macroeconomic theory. A modified “Kojima s macroeconomic theory “ is proposed to examine the interrelationship between a country’s comparative advantage in international division of labour and outward direct investment. It is argued that any change in a country s comparative advantage, which is reflected in its factor costs and intensities would lead to firms substituting capital for labour thus relocating labour-intensive industries.
