Working Paper: NBER ID: w10939
Authors: Bruce A. Blonigen; Ronald B. Davies; Glen R. Waddell; Helen T. Naughton
Abstract: Theoretical models of foreign direct investment (FDI) have only recently begun to model the role of third countries, and the empirical FDI literature has almost exclusively examined bilateral FDI data without recognizing the potential interdependence between FDI decisions to alternative host countries. This paper uses spatial econometric techniques to examine the spatial correlation between FDI to alternative (neighboring) regions. The sign of such correlations can provide evidence for or against alternative theories for FDI motivations. Using data on OECD countries from 1980-2000, we find evidence consistent with export platform FDI in Europe.
Keywords: Foreign Direct Investment; Spatial Econometrics; Export Platform
JEL Codes: F21; F23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| FDI in neighboring countries (F23) | FDI in a target country (F23) |
| Market potential variables (P23) | FDI in neighboring countries (F23) |
| Market demand (R22) | FDI in neighboring countries (F23) |
| FDI in neighboring countries (F23) | FDI in a target country (European countries) (F23) |
| Market potential coefficient (C29) | FDI in a target country (European countries) (F23) |