 Testing an Extended Knowledge-Capital Model of Foreign Direct Investment: The Role of Public Knowledge InputsJournal of Information Economics, 2024, vol. 2, issue 4, 87-120 Abstract: The knowledge-capital model explains outward foreign direct investment (FDI) of a country from its relative abundance of its knowledge assets. Early versions of the knowledge-capital theory model these assets as if they were only the results of knowledge investments by private firms. We extend the theory by a formal model of the public-private interaction in knowledge development. This sheds light on the role of the origin country of multinationals. The paper extracts four testable predictions from the model. We use the inter-country variation in national knowledge-creation systems and FDI performance to test the model using a new dataset; it holds knowledge-creation indicators for about 200 countries over the period 2000-2020. Based on a range of non-parametric tests, we can corroborate that the basic tenet of the knowledge-capital model is correct. Moreover, the results show the important role of public knowledge production for outward FDI. Keywords: Knowledge-Capital Theory of FDI; Foreign Direct Investment; National Innovation Systems; Non-parametric Test (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bba:j00008:v:2:y:2024:i:4:p:87-120:d:399 Access Statistics for this article Journal of Information Economics is currently edited by Ramona Wang More articles in Journal of Information Economics from Anser Press |
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