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FDI from the south: The role of institutional distance and natural resources

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  • Aleksynska, Mariya
  • Havrylchyk, Olena

Abstract

Using a novel dataset of bilateral FDI flows, we analyze location choices of investors from emerging economies, with an emphasis on institutions and natural resources. We show that FDI from the South has a more regional aspect than investment from the North. Institutional distance has an asymmetric effect on FDI depending on whether investors choose countries with better or worse institutions. In the latter case, large institutional distance discourages FDI inflows, but this deterring effect is diminished for destination countries with substantial resources. We also find a complementary relationship between capital flows from the North and the South in developing recipient countries, which we attribute to different FDI patterns of these investors.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 29 (2013)
Issue (Month): C ()
Pages: 38-53

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Handle: RePEc:eee:poleco:v:29:y:2013:i:c:p:38-53

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Web page: http://www.elsevier.com/locate/inca/505544

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Keywords: Foreign direct investment; South–South; Emerging economies; Institutions; Crowding-in; Natural resources;

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Cited by:
  1. Amighini, Alessia A. & Franco, Chiara, 2013. "A sector perspective on Chinese outward FDI: The automotive case," China Economic Review, Elsevier, vol. 27(C), pages 148-161.
  2. Lucia Pérez-Villar & Adnan Seric, 2014. "Multinationals in Sub-Saharan Africa: Domestic Linkages and Institutional Distance," Kiel Working Papers 1893, Kiel Institute for the World Economy.
  3. Ledyaeva, Svetlana & Karhunen, Päivi & Kosonen, Riitta, 2013. "Birds of a feather: Evidence on commonality of corruption and democracy in the origin and location of foreign investment in Russian regions," European Journal of Political Economy, Elsevier, vol. 32(C), pages 1-25.
  4. Asongu Simplice & Nguena Christian, 2014. "Equitable and Sustainable Development of Foreign Land Acquisitions: what have we learnt on policy syndromes and implications?," Working Papers 14/001, African Governance and Development Institute..
  5. Ashby, Nathan J. & Ramos, Miguel A., 2013. "Foreign direct investment and industry response to organized crime: The Mexican case," European Journal of Political Economy, Elsevier, vol. 30(C), pages 80-91.
  6. Burger, Martijn J. & Ianchovichina, Elena I., 2014. "Surges and stops in FDI flows to developing countries : does the mode of entry make a difference ?," Policy Research Working Paper Series 6771, The World Bank.
  7. Rodolphe Desbordes & Julia Darby & Ian Wooton, 2011. "Institutional Quality and FDI to the South: An Analytical Approach," Working Papers 11-31, University of Strathclyde Business School, Department of Economics.

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