This paper argues that, under certain political economic conditions, outward foreign direct investment (FDI) can promote economic development in the home economies from which the investment originates. To support its argument, the paper presents a conceptual framework that incorporates simultaneously the complex interrelationships between the three main tenets shaping the developmental outcomes of outward FDI -the home economy conditions that induce firms to invest abroad; the role of the state in linking outward investment to economic development back in the home economy; and the investment returns which stimulate catchingup. The framework helps researchers and policymakers assess particular characteristics of outward FDI and their positive impacts on the home economies. In other words, the framework aims to unpack the interconnection between outward FDI-promoting policies and firm-specific behaviour in investing abroad. Its relevance to developing economies is further illustrated through an assessment of state roles in forging an effective state-corporate nexus to embed expertise acquired from abroad.