 From globalization to glocalization: Cultural interdependence as a source of FDI motivationSuparna Chakraborty, Miao Grace Wang and M. C. Sunny Wong Research in Economics, 2025, vol. 79, issue 1 Abstract: In this paper, we explore the agglomeration effect of culture on foreign direct investment (FDI). Using data on US FDI to 74 host countries from 1984 to 2017, our analysis shows a negative effect of bilateral cultural distance on US FDI to a host, consistent with previous studies. Central to our research is the application of a higher-order spatial model, which enables us to examine correlations of FDI across various hosts along both geographical and cultural dimensions. We find that US FDI across culturally similar host nations move together. Specifically, our results show that US FDI in a host may rise by 0.25% with every 1% increase in US FDI in other hosts that are culturally similar to the host of interest. Such results are robust to a battery of sensitivity checks, such as controlling for spatial correlation of geographically proximate hosts. Further, the agglomeration effects also display significant variations across industries. Keywords: Foreign direct investment; Glocalization; Cultural distance; Cultural interdependence; Spatial analysis (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:eee:reecon:v:79:y:2025:i:1:s1090944325000018 DOI: 10.1016/j.rie.2025.101024 Access Statistics for this article Research in Economics is currently edited by Federico Etro More articles in Research in Economics from Elsevier |
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