Global FDI Convergence Patterns?: Evidence from International Comparisons
AbstractIn this paper we examine, for the first time to the best of our knowledge, the issue of convergence in Foreign Direct Investment (FDI) for a sample of countries representative of the world economy. We distinguish between groups of countries so that we can better understand differences attributed to specific developmental stages and different institutional and regional characteristics. The results of our analysis can be seen as an attempt to evaluate the validity of the New Economic Geography (NEG) theory which predicts a “core-periphery” structure of international production at intermediate trade costs. Our econometric methodology utilizes panel unit root tests, which have previously been used in similar studies, but also appropriate dynamic panel regressions to correctly assess the magnitude of the convergence coefficient. Furthermore, we provide a simpler derivation for an equivalent estimable equation to the one used in past convergence studies. Our overall results point toward convergence tendencies, contrary to a “coreperiphery” pattern. We discuss our results in the context of the relevant literature, along with their policy-making implications for transnational, national and regional investment strategies.
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Bibliographic InfoArticle provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.
Volume (Year): 22 (2007)
Issue (Month): ()
Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
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