SOURCES OF FOREIGN DIRECT INVESTMENT FLOWS TO DEVELOPING ASIA: THE IMPORTANCE OF TIME ZONE

Rabin Hattari () and Ramkishen Rajan
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Rabin Hattari: Asian Development Bank, Indonesia Resident Mission, Gedung BRI II, 7th Floor, JI. Jend. Sudirman Kav. 44-46, Jakarta 10210, Indonesia

China Economic Policy Review (CEPR), 2012, vol. 01, issue 02, 1-16

Abstract: This paper investigates the determinants of foreign direct investment (FDI) flows to developing Asia using bilateral FDI flows for the period 1990 to 2005. We pay particular attention to possible differences in the determinants of FDI flows to developing Asian economies from the rest of the Asia-Pacific region compared to those from nonregional OECD economies, with an emphasis on the role of distance and time zone. We find that the elasticity of distance is much greater for FDI from the non–Asia-Pacific OECD economies than intraregional Asian flows. However, this difference disappears when one accounts for differences in time zones. The world is not flat; differences in time zones appear to act as a hindrance to FDI.

Keywords: Developing Asia; distance; foreign direct investment (FDI); gravity model; time zone; F21; F23; F36 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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DOI: 10.1142/S1793969012500136

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