Methodology
This study employs annually data range from 1975 until 2007. The data set consists of
FDI outflow of Singapore as endogenous variable while real income of Singapore,
trade openness, interest rate of Singapore and nominal exchange rate as exogenous
variables. The real income variable is measured in real Gross Domestic Product
(GDP), trade openness is proxied by the summation of aggregate export and import of
Singapore, meanwhile interest rate refers to Euro-Dollar rates. Euro-Dollar rates is
used as a proxy of interest rate in Singapore as Singapore is play prominent roles as
international financial hub and moreover, foreign interest rate has great influence on
the interest rate in Singapore. All the data are obtained from World Investment Report,
UNTACD and International Financial Statistics from International Monetary Fund.
All the variables in the data set are transformed into natural logarithms for statistical
purpose.
Equation (1) represents the assumption that FDI outflow of Singapore is determined
by several factors as shown