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Determinants of foreign direct investment in services

Ivar Kolstad and Espen Villanger ()

No WP 2004: 2, CMI Working Papers from CMI (Chr. Michelsen Institute), Bergen, Norway

Abstract: This study uses industry level foreign direct investment (FDI) data from 57 countries 1989-2000, to examine the host country determinants of FDI flows in services as a whole, and in the major service industries. Consistent with the observation that many services are non-tradable, we find that service FDI is market-seeking, and unaffected by trade openness. Producer services are important in binding together vertically disintegrated chains of production, accordingly we find a strong correlation between FDI in manufacturing and FDI in finance and transport. While composite political risk does not affect FDI in services, disaggregate socio-political indices prove significant in certain service industries.

Keywords: Foreign; direct; investment; Services (search for similar items in EconPapers)
Pages: 25 pages
Date: 2004
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Journal Article: Determinants of foreign direct investment in services (2008) Downloads
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