FDI from the south: The role of institutional distance and natural resources

Mariya Aleksynska and Olena Havrylchyk

European Journal of Political Economy, 2013, vol. 29, issue C, 38-53

Abstract: Using a novel dataset of bilateral FDI flows, we analyze location choices of investors from emerging economies, with an emphasis on institutions and natural resources. We show that FDI from the South has a more regional aspect than investment from the North. Institutional distance has an asymmetric effect on FDI depending on whether investors choose countries with better or worse institutions. In the latter case, large institutional distance discourages FDI inflows, but this deterring effect is diminished for destination countries with substantial resources. We also find a complementary relationship between capital flows from the North and the South in developing recipient countries, which we attribute to different FDI patterns of these investors.

Keywords: Foreign direct investment; South–South; Emerging economies; Institutions; Crowding-in; Natural resources (search for similar items in EconPapers)
JEL-codes: E02 F21 F23 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (107)

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Working Paper: FDI from the South: the Role of Institutional Distance and Natural Resources (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:29:y:2013:i:c:p:38-53

DOI: 10.1016/j.ejpoleco.2012.09.001

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