Estimating the Impact of Time-Invariant Variables on FDI with Fixed Effects

Ronald Davies, Delia Ionascu and Helga Kristjánsdóttir ()
Additional contact information
Delia Ionascu: Department of Economics, Copenhagen Business School, Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark

No 02-2007, Working Papers from Copenhagen Business School, Department of Economics

Abstract: This paper applies the panel fixed effects with vector decomposition estimator to three FDI datasets to estimate the impact of time-invariant variables on FDI while including fixed effects. We find that the omission of fixed effects significantly biases several of these variables, especially those proxying for trade costs and culture. After including fixed effects, we find that many time-invariant variables indicate the importance of vertical FDI. We also find that by eliminating these biases, the differences across datasets largely disappear. Thus, controversies in the literature that are driven by differences in data sets may be resolved by using this estimation technique. JEL Classification: F14, F23 Key Words: Foreign Direct Investment, Trade Costs, Culture

Keywords: na (search for similar items in EconPapers)
JEL-codes: G10 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2007-01-01
References: Add references at CitEc
Citations:

Downloads: (external link)
http://openarchive.cbs.dk/cbsweb/handle/10398/7610 (application/pdf)
Full text not avaiable

Related works:
Journal Article: Estimating the Impact of Time-Invariant Variables on FDI with Fixed Effects (2008)
Working Paper: Estimating the Impact of Time-Invariant Variables on FDI with Fixed Effects (2007)
Working Paper: Estimating the Impact of Time-Invariant Variables on FDI with Fixed Effects (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:cbsnow:2007_002

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from Copenhagen Business School, Department of Economics Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1.floor, DK-2000 Frederiksberg, Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by CBS Library Research Registration Team ().