FDI in Space: Spatial Autoregressive Relationships in Foreign Direct Investment

Bruce Blonigen, Ronald Davies, Glen R. Waddell and Helen Naughton

Chapter 2 in Foreign Direct Investment, 2019, pp 55-88 from World Scientific Publishing Co. Pte. Ltd.

Abstract: There are a number of theoretical reasons why foreign direct investment (FDI) into a host country may depend on the FDI in proximate countries. Such spatial interdependence has been largely ignored by the empirical FDI literature, with only a couple recent papers accounting for such issues in their estimation. This paper conducts a general examination of spatial interactions in empirical FDI models using data on US outbound FDI activity. We find that estimated relationships of traditional determinants of FDI are surprisingly robust to inclusion of terms to capture spatial interdependence, even though such interdependence is estimated to be significant. However, we find that both the traditional determinants of FDI and the estimated spatial interdependence are quite sensitive to the sample of countries one examines.

Keywords: Foreign Direct Investment; Multinational Enterprises; Mergers and Acquisitions; Greenfield; Trade Policy; Taxation; Spillovers; Offshoring; Wage Inequality; Firm-Specific Assets; Antidumping; Tariff-jumping; Industrial Organization; Ownership-Location-Internalization Theory (search for similar items in EconPapers)
JEL-codes: F02 F13 F6 (search for similar items in EconPapers)
Date: 2019
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Related works:
Journal Article: FDI in space: Spatial autoregressive relationships in foreign direct investment (2007)
Working Paper: FDI in Space: Spatial Autoregressive Relationships in Foreign Direct Investment (2004)
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