Determinants of foreign direct investment in services

Ivar Kolstad and Espen Villanger ()

European Journal of Political Economy, 2008, vol. 24, issue 2, 518-533

Abstract: This study uses industry level foreign direct investment (FDI) data from 57 countries 1989-2000, to examine the host country determinants of FDI flows in services as a whole, and in the major service industries. Institutional quality and democracy appear more important for FDI in services than general investment risk or political stability. Democracy influences FDI to developing countries only, suggesting that the absence of democracy is detrimental to investment below a certain threshold. Consistent with the observation that many services are non-tradable, we find that service FDI is market-seeking, and unaffected by trade openness. We find a strong correlation between FDI in manufacturing and FDI in producers' services such as finance and transport.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (71)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0176-2680(07)00079-1
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Determinants of foreign direct investment in services (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:24:y:2008:i:2:p:518-533

Access Statistics for this article

European Journal of Political Economy is currently edited by J. De Haan, A. L. Hillman and H. W. Ursprung

More articles in European Journal of Political Economy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().