Which Countries Export FDI, and How Much?

02/2004; DOI: 10.2139/ssrn.1009013
Source: RePEc

ABSTRACT The paper provides a reconciliation of Lucas' paradox, based on fixed setup costs of new investments. With such costs, it does not pay a firm to make a "small" investment, even though such an investment is called for by marginal productivity conditions. Using a sample of 45 developed and developing countries we estimate jointly the participation equation (the decision whether to invest at all) and the FDI flow equation (the decision how much to invest). We find that countries which are more likely to serve as source for FDI exports than their characteristics project export lower flow of FDI than is predicted by their characteristics. This negative correlation suggests that the source countries with relatively low setup costs are also those with high marginal productivity of capital

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    ABSTRACT: Unlike trade flows, there has been little to no detailed examination of foreign direct investment (FDI) flows between Asian economies. This paper uses bilateral FDI flows data to investigate trends in intra-Asian FDI flows over the period 1990-2005. It employs an augmented gravity model to identify the main determinants of intra-Asian FDI flows. Possible drivers of FDI flows, including transactional and informational distance (proxied by distance), real sector variables, financial variables and quality of institutions are examined. Copyright © 2009 The Authors. Journal compilation © 2009 Crawford School of Economics and Government, The Australian National University and Blackwell Publishing Asia Pty Ltd..
    Asian-Pacific Economic Literature 01/2009; 23(2):73-93. · 0.41 Impact Factor
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    ABSTRACT: This working paper addresses a number of policy-relevant issues regarding the EU’s bilateral investment treaties (BITS), namely, whether the EU’s BITs have a significantly positive impact on outflows; and which member states and which BIT partners have had a significant experience after the implementation of the BIT. The author finds that both OECD BITs and EU BITs have a statistically significant and positive impact on FDI outflows. This result is robust to the inclusion of variables such as privatisation proceeds that control for the level of economic reform, the level of trade linkages, the level of democratic freedom and a measure of risk of expropriation among other standard controls. A number of policy implications of these findings are also considered.
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May 30, 2014