Is ‘no news’ really ‘good news’? Country visibility and FDI location choice

Laurel Adams, Rebecca Neumann and Saleh S. Tabrizy

International Review of Applied Economics, 2018, vol. 32, issue 4, 489-524

Abstract: In choosing where to invest, firms seek out information on a set of possible locations. Information asymmetries may make country visibility particularly important in decisions to locate investment abroad. We develop a country visibility index based on international news stories in The Economist, and show that broad country visibility is at least as important in attracting foreign direct investment (FDI) as other specific investment promotion activities or proxies for information frictions. Controlling for standard gravity model determinants of FDI, we find that greater visibility of developing countries, in particular lower middle- and low-income countries, increases the investment that they receive from US multinational corporations.

Date: 2018
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DOI: 10.1080/02692171.2017.1351925

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