Analysis of Factors Influencing Taiwan's Unregistered Overseas Investment Behavior

Abstract

There has been a significant increase in Taiwanese investment overseas since the mid-1980s. However, when Taiwanese investors choose to pursue overseas investment, they do not necessarily register this with the government (specifically, with the Investment Commission at the Ministry of Economic Affairs). Although this is a common phenomenon, there has thus far been a scarcity of in-depth analysis of this trend within the published literature. The official statistics on Taiwanese overseas investment, as provided by the Taiwanese government, differ significantly from those provided by the countries in which the investments take place. We can deduce from this that some businessmen engage in foreign investment without registering it with the government, and as a consequence, suggest that the reasons for such non-registering behavior are worthy of study. This paper adopts theoretical and empirical models to observe unregistered overseas investment behavior patterns and to investigate the reasons influencing the decision to engage in unregistered investment. A questionnaire survey is undertaken to estimate the proportion of unregistered investment, with theoretical and empirical analyses being used to explore the factors behind the decision to adopt non-registering behavior. The results show that the proportion of unregistered investment tends to be higher in South-East Asia and China than in the USA and that complicated administrative procedures have a positive influence on this type of behavior. Furthermore, such behavior can be predetermined by the prospects of higher returns on investment.