IFDI, OFDI, and divestment: a global level analysis

Using the World Bank’s data, we explain factors related to divestment using various limited dependent models. For the robustness of our estimated models, we also use sub-sample analysis. Reducing profit margin will likely increase divestment, supporting the reverse FDI theory. Trade, political instability, non-performing loans, and R&D significantly influence divestment. A paradoxical result is found for trade, posing a serious question of whether liberalization is better or worse for the economy. Higher investment in innovation increases the possibility of divestment, which may be a reason for shifting the R&D investment to product development. Energy intensity, corruption, population exposure to higher pollution, and higher income and energy-importing countries seem to have influenced specific measures' divestment.