Determinants of foreign direct investment of OECD countries 1991-2001
Gast, Michael
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Please cite with these IDs
URN: urn:nbn:de:hebis:26-opus-23967
URL: http://geb.uni-giessen.de/geb/volltexte/2005/2396/
Free keywords (English):
foreign direct investment and international trade , multinational firms , models with panel data
University:
Justus-Liebig-Universität Gießen
Institute:
Zentrum für internationale Entwicklungs- und Umweltforschung
Department::
Zentrum für internationale Entwicklungs- und Umweltforschung
Dewey Decimal Classification:
Economics
Document type:
ResearchPaper
Journal, Series:
Discussion papers / Zentrum für Internationale Entwicklungs- und Umweltforschung
; 27 / 2005
Language:
English
Year of creation:
2005
Date of publication:
21.09.2005
Abstract in English:
Using a fixed-effects panel data approach, FDI flows of 22 OECD countries
are explained by gravity equations over the period 1991-2001. It is
distinguished between all available observations, Intra-EU25 observations
only, and observations not belonging to the EU25 area in order to control
for EU-specific effects. Regressions are repeated with exports as
dependent variable in order to capture diverging influences for trade flows.
Changes in total market size and relative market size are important factors
that lead both FDI and exports in the same direction. However, relative
market size is only significant in the FDI equation when variation between
the EU25 area and other investment is taken into account, thus indicating a
concentration of FDI within Western and Central Europe. Stock market
booms boost FDI but not exports. Differences in significance levels/signs of
coefficients of political indicators and exchange rate changes indicate that
exports are demand-driven while FDI is supply-driven. Year dummies
interacted with country distance show that, overall, FDI and exports tended
to flow less to distant countries over the period under consideration.
However, this trend is reversed for exports within the EU25 area.
License:
Publishing license for publications excluding print on demand