While the empirical evidence provided in sections A and B indicates that the positive effects from OFDI predominate, it is possible that no, or limited, effects are generated from OFDI, or that there are unfavourable effects.
At the macro-level, home-country effects may not be detected when the number of investment projects is too low, even if there might be a positive impact at the firm level. This might especially be the case in developing countries and when a limited number of firms from a given country invest abroad. Barriers to doing business in host countries might also reduce the extent to which home-country effects are realised. Examples of such barriers could be regulatory hurdles in repatriating funds, restrictions on know-how transfer out of the host country, differences between parent and subsidiary companies that inhibit know-how transfer, insufficient absorptive capacity and the lack of appropriate transmission channels between host and home economies (Knoerich 2017, Stephenson 2018b, UNESCAP 2020).
The risks that OFDI may have unfavourable implications for the home country are primarily related to the fact that OFDI is a capital outflow and can crowd out economic activity in the home country. There might also be concerns about competitive neutrality if OFDI is supported by home-country measures (see section C).
Sometimes, OFDI can have both favourable and unfavourable effects, for example benefiting high-skilled employees at the expense of low-skilled labour (Perea and Stephenson 2018). A few studies have found a detrimental effect in the short-term that diminished over time (Huang 2013, Debaere, Lee, and Lee 2010).