Patterns of foreign direct investment in poor countries

Hildegunn Kyvik NordÅs
Authors registered in the RePEc Author Service: Hildegunn Kyvik Nordås

The Journal of International Trade & Economic Development, 2001, vol. 11, issue 3, 247-265

Abstract: This paper introduces endogenous adoption costs for productive assets in a Ramsey-type growth model with international capital flows. There are two classes of productive assets: owner-specific and location-specific. Adoption costs are an increasing function of the level of technology embodied in the investor's owner-specific assets and a declining function of the host country's location-specific assets. In this setting, the observed pattern of international capital flows is consistent with diminishing returns to capital. Further, our model predicts that the sectoral allocation of foreign direct investment is similar in rich and poor countries.

Keywords: Foreign Direct Investment; Economic Growth; Industrial Structure; Adoption Costs (search for similar items in EconPapers)
Date: 2001
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Working Paper: Patterns of Foreign Direct Investment in Poor Countries (2000)
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DOI: 10.1080/09638190210151392

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