ISAS Working Papers

The paper analyses the factors behind the trend of India's outward investment flows to a few top destination-countries during the years 2008 to 2013. India's investment decisions are not of the same kind, and hence the results of analysis showed interesting insights on offshore financial centres (OFCs). The main aim of the paper, apart from reiterating the robustness of traditional investment theories, is to test whether the traditional determinants of FDI flows; trade, institutions, exchange rate etc. hold good even when the host destination is an OFC. A significant fraction of global capital flows though these jurisdictions, but it has not received much research focus. A better understanding of their nature can help countries in policy decisions. The results confirm that for a host country to attract FDI from India, the traditional determinants remain significant; however, where the host country is an OFC, traditional factors are rendered insignificant.