This paper assesses the causal relationship between outward foreign direct investment (FDI) and various sides of firm performance, using micro data from Portuguese manufacturing firms during 2006-2012 and 2017-2020. Our analysis shows that the learning effects for Portuguese parent firms depend on the underlying outward FDI strategy. In particular, those learning effects seem to be mostly visible when firms engage in vertical outward FDI. Further, vertical or horizontal outward FDI appear to enhance the integration of Portuguese firms into the global economy through increased export intensity. Overall, the findings supports the argument that outward FDI can indeed be at root of upgrading performance and firm’s restructuring in a small, open and peripheral economy such as Portugal. Nonetheless, the capability to be resilient and deal with sudden and external shocks - such as COVID-19 pandemic - is not supported by the available preliminary data.
