The Role of Public Policy in Closing Foreign Direct Investment Gaps: An Empirical Analysis

Christian Bellak, Markus Leibrecht and Robert Stehrer

No 48, wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw

Abstract: Using public policy instruments to attract Foreign Direct Investment (FDI) has become standard in most countries, irrespective of their level of development, geographical location or industrial structure. Against this background the paper analyses the suitability of various public policies to attract inward FDI stock based on a sample of 11 countries and 10 industries from the manufacturing sector over 10 years. For this aim we derive an empirical baseline model of the determinants of inward FDI stock. From this baseline model, FDI gaps - measured as the difference between the 'estimated actual' inward FDI stock and the 'potential' FDI stock which could be realized if a certain 'best practice policy' were carried out - are derived. The analysis focuses on business taxation, public research and development expenditures, the information and communication infrastructure endowment, labour costs as well as institutional and skill-related policies. The analysis inter alia reveals the share of each of these location factors in the total industry- and country-level FDI gap.

Keywords: economic policy; foreign direct investment; European Union; industry-level study; location decision (search for similar items in EconPapers)
JEL-codes: F21 H25 H71 (search for similar items in EconPapers)
Pages: 23 pages including 8 Tables
Date: 2008-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Published as wiiw Working Paper

Downloads: (external link)
https://wiiw.ac.at/the-role-of-public-policy-in-cl ... analysis-dlp-236.pdf (application/pdf)

Related works:
Journal Article: The role of public policy in closing foreign direct investment gaps: an empirical analysis (2010)
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:wii:wpaper:48

Ordering information: This working paper can be ordered from
https://wiiw.ac.at

Access Statistics for this paper

More papers in wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw Contact information at EDIRC.
Bibliographic data for series maintained by Customer service ().