FDI in space: Spatial autoregressive relationships in foreign direct investment

There are a number of theoretical reasons why foreign direct investment (FDI) into a host country may depend on the FDI in proximate countries. Such spatial interdependence has been largely ignored by the empirical FDI literature, with only a couple recent papers accounting for such issues in their...

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Bibliographic Details
Published inEuropean economic review Vol. 51; no. 5; pp. 1303 - 1325
Main Authors Blonigen, Bruce A., Davies, Ronald B., Waddell, Glen R., Naughton, Helen T.
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.07.2007
Elsevier
Elsevier Sequoia S.A
SeriesEuropean Economic Review
Subjects
Econometrics
Economic models
Estimating techniques
Foreign direct investment
Foreign investment
Interdependence
Multinational enterprises
Regression analysis
Spatial analysis
Spatial econometrics
Studies
Foreign direct investment
Spatial econometrics
F21
Multinational enterprises
F23
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Summary:There are a number of theoretical reasons why foreign direct investment (FDI) into a host country may depend on the FDI in proximate countries. Such spatial interdependence has been largely ignored by the empirical FDI literature, with only a couple recent papers accounting for such issues in their estimation. This paper conducts a general examination of spatial interactions in empirical FDI models using data on US outbound FDI activity. We find that estimated relationships of traditional determinants of FDI are surprisingly robust to inclusion of terms to capture spatial interdependence, even though such interdependence is estimated to be significant. However, we find that both the traditional determinants of FDI and the estimated spatial interdependence are quite sensitive to the sample of countries one examines.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0014-2921
1873-572X
DOI:10.1016/j.euroecorev.2006.08.006