ABSTRACT
This chapter is based on four main propositions. Firstly, there is a correlation between FDI and profitability. Empirically, the analysis of this hypothesis is based on the simple Ordinary Least Square’s (OLS) regression of FDI on profitability. Secondly, the motivations of Singapore-based firms for FDI is determined by certain “push” and “pull” factors. The results from the Student t-tests and stepwise regressions are used to examine the determinant push and pullfactors between foreign and localfirms. Thirdly, investing abroad entails a large initial cost of search and investigation and as such, overseas direct investment will be carried out by mainly large or firms with monopolistic advantage. A Cross-Tabulation is used to show the difference between foreign TNCs in Singapore that are claimed to possess monopolistic advantages and local firms that are small in size and as such, respond only to macroeconomic determinants of FDI. Fourthly, the strengths of Singapore s firms lie in their ability to engage in joint ventures and minority stake projects. The results from Spearman s Rank Correlation Coefficient tests are used to examine the relative difference between foreign and local investment decisions. The results of the Chi-Square (X2) is used to show the mean distribution of each group of investors.
