Determinants of Capital Intensive and R&D Intensive Foreign Direct Investment

Martin Gonzalez-Eiras and Jose Prado ()

No 753, Seminar Papers from Stockholm University, Institute for International Economic Studies

Abstract: We study the determinants of capital intensity and technology content of foreign direct investment, an important economic driving force for developing countries. For this purpose, we use sectoral industry data on U.S. foreign investment abroad, and data on host countries' institutional characteristics, like investment climate, protection of property rights, labor standards and constitutional arrangements. Our regressions show that better protection of property rights has a significant positive effect on R&D but not on capital intensive capital flows. There is evidence that an increase in workers' bargaining power results in a reduction of capital and technologically intensive foreign investment. And although the evidence with respect to constitutional arrangements is not very strong, presidential regimes appear to be less able than parliamentary ones to deliver policies attracting R&D intensive capital flows. This is consistent with recent research on the effects of constitutional arrangements on economic growth.

Keywords: FDI (search for similar items in EconPapers)
JEL-codes: F21 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2007-08-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iiessp:0753

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