Reconsideration of the Effects of Political Factors on FDI: Evidence from Japanese Outward FDI
AbstractThis paper empirically examines the role of political factors in the Japanese outward Foreign Direct Investment (FDI) activities with a panel data of 30 developed or developing countries for the period of 1995-2009. The estimation model is constructed on the basis of the OLI (ownership, location and internalization advantages) and knowledge-capital models. Political factors, which represent multiple dimensions of each host country including important institutional assessments, are included as additional explanatory variables with market potential, wages, skilled workforce endowments, investment cost, and openness. It is found that Political factor perception by Japanese MNCs is sensitive to different levels of initial political stability in the host countries. Thus, the model with political factors and traditional explanatory variables reasonably explains recent Japanese outward FDI flows and reveals new patterns in its behavior.
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Bibliographic InfoArticle provided by Better Advances Press, Canada in its journal Review of Economics & Finance.
Volume (Year): 3 (2013)
Issue (Month): (February)
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Find related papers by JEL classification:
- F20 - International Economics - - International Factor Movements and International Business - - - General
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
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