Can the Neoclassical Model Explain the Distribution of Foreign Direct Investment Across Developing Countries?

Harm Zebregs

No 1998/139, IMF Working Papers from International Monetary Fund

Abstract: Since the beginning of the 1990s, foreign direct investment (FDI) in developing countries has increased dramatically. The distribution of FDI flows across these countries, however, is highly uneven; only a small number attract comparatively large amounts of foreign capital. This paper investigates whether the pattern of FDI flows can be explained by the standard neoclassical model or by modified versions of this model that allow for differences in production technologies across countries. The results suggest that the standard neoclassical approach is not particularly useful if we want to understand FDI flows to developing countries.

Keywords: WP; FDI flow; FDI-GNP ratio; capital; GNP; Foreign Investment; Neoclassical Theory; flows to developing countries; FDI data; share parameter; Foreign direct investment; Capital flows; Capital productivity; East Asia (search for similar items in EconPapers)
Pages: 28
Date: 1998-09-01
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1998/139

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