Determinants of foreign direct investment in services
AbstractThis study uses industry level foreign direct investment (FDI) data from 57 countries 1989-2000, to examine the host country determinants of FDI flows in services as a whole, and in the major service industries. Institutional quality and democracy appear more important for FDI in services than general investment risk or political stability. Democracy influences FDI to developing countries only, suggesting that the absence of democracy is detrimental to investment below a certain threshold. Consistent with the observation that many services are non-tradable, we find that service FDI is market-seeking, and unaffected by trade openness. We find a strong correlation between FDI in manufacturing and FDI in producers' services such as finance and transport.
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Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Political Economy.
Volume (Year): 24 (2008)
Issue (Month): 2 (June)
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Web page: http://www.elsevier.com/locate/inca/505544
Other versions of this item:
- Ivar Kolstad & Espen Villanger, 2004. "Determinants of foreign direct investment in services," CMI Working Papers WP 2004: 2, CMI (Chr. Michelsen Institute), Bergen, Norway.
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