Which are the long-run determinants of US outward FDI? Evidence using large long-memory panels

Mariam Camarero, Sergi Moliner () and Cecilio Tamarit
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Sergi Moliner: University Jaume I

No 2022.08, Working Papers from International Network for Economic Research - INFER

Abstract: This paper analyzes the long-run determinants of US outward FDI stock, focusing mainly on the Euro Area (EA) for the period 1985-2019. We consider a sample of 54 developed and emerging host countries representing over 70% of the total US outward FDI stock. We aim to capture different determinants by country groups zooming in on the European Union (EU). We implement a Dynamic Common Correlated Effects Pooled Mean Group (DCCEPMG) estimator for this aim. Our econometric approach is especially suited for analyzing integrated economic areas as it allows us to deal with cross-section dependence (CSD), non-stationarity, structural breaks, and slope homogeneity usually present in large panel data. Our main results suggest that horizontal (HFDI) and vertical (VFDI) strategies coexist for all country groups. However, as we move towards more homogeneous groups, the results show greater importance of VFDI. Additionally, we find that some variables have a common long-run effect on USOFDI, especially for smaller and more homogeneous groups.

Keywords: BMA; DCCEPMG; long-run; structural breaks; economic integration (search for similar items in EconPapers)
JEL-codes: F (search for similar items in EconPapers)
Pages: 44 pages
Date: 2022
New Economics Papers: this item is included in nep-int
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Working Paper: Which are the long-run determinants of US outward FDI? Evidence using large long-memory panels (2022)
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