FDI Flows to Latin America, East and Southeast Asia, and China: Substitutes or Complements?
AbstractIs China diverting foreign direct investment (FDI) from other developing countries? Theoretically, a growing China augments other countries' FDI by creating more production networking and raising demand for resources. However, low Chinese costs lure multinationals away from other production sites. Here we explore this issue empirically. We focus on East and Southeast Asia and Latin America for 1985-2002. We control for the standard determinants of inward FDI, then add China FDI to represent the "China Effect." We found that China's FDI is positively related to FDI in Asia, while the China Effect is insignificant for Latin America. Also the China Effect is generally not the most important determinant of other countries' FDI. Market sizes and policies such as corporate tax rates and openness tend to be more important. Copyright (C) 2010 Blackwell Publishing Ltd.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of Development Economics.
Volume (Year): 14 (2010)
Issue (Month): s1 (08)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1363-6669
Other versions of this item:
- Chantasasawat, Busakorn & Fung, K. C. & Iizaka, Hitomi & Siu, Alan, 2005. "FDI Flows to Latin America, East and Southeast Asia and China: Substitutes or Complements?," Santa Cruz Center for International Economics, Working Paper Series qt3614g4nw, Center for International Economics, UC Santa Cruz.
- Chantasasawat, Busakorn & Fung, K. C. & Iizaka, Hitomi & Siu, Alan, 2005. "FDI Flows to Latin America, East and Southeast Asia and China: Substitutes or Complements?," Santa Cruz Department of Economics, Working Paper Series qt7hc6z50p, Department of Economics, UC Santa Cruz.
- Chantasasawat, Busakorn & Fung, K. C. & Iizaka, Hitomi & Siu, Alan, 2005. "FDI Flows to Latin America, East and Southeast Asia and China: Substitutes or Complements?," Santa Cruz Department of Economics, Working Paper Series qt3614g4nw, Department of Economics, UC Santa Cruz.
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