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Revisiting the investment development path (IDP): A non linear fluctuation approach

Saime Kayam () and M. Hisarciklilar

International Journal of Applied Econometrics and Quantitative Studies, 2009, vol. 9, issue 2

Abstract: The investment development path (IDP) approach claims that countries go through five stages with respect to their net outward investment positions as they develop. Attempts to test its validity using time-series or cross-section estimation techniques were moderately successful and the functional specifications used did not reflect IDP structure well. In this study, we introduce a fluctuation function, which is obtained from the general solution of an exponential function reflecting a continuous compounding process. It has extra properties that help capture the idiosyncratic shape of IDP and gives parameter estimates that facilitate interpretation of the stage a country is at.

Keywords: investment development path; trigonometric function; nonlinear estimation (search for similar items in EconPapers)
JEL-codes: C23 F21 F23 (search for similar items in EconPapers)
Date: 2009
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