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This paper completely examines the market factors, labor cost factors, and human capital factors which influence the location decisions of Taiwanese outward investment from 1998 to 2008. The empirical result which is based on the gravity model shows that the outward FDI of Taiwanese multinationals is generally affected by the market factors, but the impact of labor cost and human capital depends on different industries and market location factors which are relevant to different needs for relatively low-skilled workers and relatively highskilled workers. Our empirical results, which use sensitivity analysis to find out the variance between the industry and the market, are consistent with the predictions of our initial analysis. By the implications of the Kaitz index and information from other labor factors, we show that manufacturers will particularly emphasize technical requirements when they invest in developed countries. However, manufacturers will invest in developing countries with strong considerations of their lower labor cost. Because Mainland China has both inducements of market potential and lower-cost labor, the empirical result also shows that FDI in Mainland China is notably higher than in developed and other developing countries. [ABSTRACT FROM AUTHOR]