Abstract

This study investigates the behavior of the outward foreign direct investment (FDI) of Taiwan. Previous studies seldom incorporated the element of "time" in their analysis of FDI decision-making. The "time factor" cannot only provide additional information, as well as play a very important role in dynamic investment decision-making. We apply the hazard rate approach, taking into consideration the conditional probability of the element of time, to perform an empirical analysis. The empirical results show: (1) The probability of a representative firm (characteristics are sample means) completing an FDI within a period of 4.38 years is 0.25, within a period of 10.55 years, it is 0.5, and within a period of 21.09 years, it is 0.75. (2) Firm sizes and export ratios are positively related to the intension to undergo FDI, while the degree of capital intensities has a negative impact on the likelihood to invest internationally. (3) The major factors motivating firms in Taiwan to male FDI in recent years are utilizing local labor, expanding markets, and following principal customers.