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Spatial Interdependencies of FDI Locations: A Lessening of the Tyranny of Distance?

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  • Stephen G. Hall

    (Leicester University, NIESR and Bank of Greece)

  • Pavlos Petroulas

    ()
    (Bank of Greece)

Abstract

Recent theoretical approaches stress the importance of complex integration strategies of multinationals and the interdependence between locations. Up till now little has been done to incorporate the potential cross-country dependencies into the empirical analysis of the determinants and the structure of foreign direct investment. By utilizing a panel data set that consists of real FDI stocks for 476 country pairs for the years 1994-2004 and a distance weighted spatial matrix, we find significant third country effects. Interestingly, the bilateral variables seem to be in concordance with the notion of horizontally motivated FDI while the spatial third country effects seem to comply with the notion of vertical FDI and production fragmentation. While bilateral variables seem to dominate location decisions the results confirm the existence and importance of international interdependence.

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Bibliographic Info

Paper provided by Bank of Greece in its series Working Papers with number 67.

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Length: 36 pages
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:bog:wpaper:67

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Keywords: Foreign Direct Investment; Spatial Econometrics; Panel Data;

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Citations

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Cited by:
  1. Stephan Barisitz, 2008. "Banking Transformation (1989 - 2006) in Central and Eastern Europe - With Special Reference to Balkans," Working Papers 78, Bank of Greece.
  2. Peter Bernholz, 2008. "Government Bankruptcy of Balkan Nations and their Consequences for Money and Inflation before 1914: A Comparative Analysis," Working Papers 74, Bank of Greece.
  3. Georgios Fotopoulos & Helen Louri, 2011. "On the Geography of International Banking: a case for spatial econometrics?," ERSA conference papers ersa10p1081, European Regional Science Association.
  4. Paolo Sgrignoli & Rodolfo Metulini & Stefano Schiavo & Massimo Riccaboni, 2013. "The Relation Between Global Migration and Trade Networks," Working Papers 6/2013, IMT Institute for Advanced Studies Lucca, revised Oct 2013.
  5. Jaime Martínez-Martín, 2011. "General equilibrium long-run determinants for Spanish FDI: a spatial panel data approach," SERIEs, Spanish Economic Association, vol. 2(3), pages 305-333, September.
  6. Apostolides, Alexander, 2008. "“How Similar to South-Eastern Europe were the Islands of Cyprus and Malta in terms of Agricultural Output and Credit? Evidence during the Interwar Period”," MPRA Paper 9968, University Library of Munich, Germany.
  7. Roumen Avramov & Dragana Gnjatovic, 2008. "Stabilization Policies in Bulgaria and Yugoslavia During Communism's Terminal Years : 1980s Economic Visions in Retrospect," Working Papers 81, Bank of Greece.
  8. Kelejian, Harry & Tavlas, George S. & Petroulas, Pavlos, 2012. "In the neighborhood: The trade effects of the Euro in a spatial framework," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 314-322.
  9. Eckhardt Bode & Peter Nunnenkamp & Andreas Waldkirch, 2009. "Spatial Effects of Foreign Direct Investment in US States," Kiel Working Papers 1535, Kiel Institute for the World Economy.
  10. Chen, Yanjing, 2009. "Agglomeration and location of foreign direct investment: The case of China," China Economic Review, Elsevier, vol. 20(3), pages 549-557, September.
  11. Zarko Lazarevic, 2008. "Banking Performance in South-Eastern Europe During the Interwar Period," Working Papers 79, Bank of Greece.
  12. Sophia Lazaretou, 2008. "Banking and Central Banking in Pre-WWII Grecce: Money and Currency Developments," Working Papers 86, Bank of Greece.
  13. Georgios Fotopoulos & Helen Louri, 2011. "On the geography of international banking: the role of third-country effects," Working Papers 125, Bank of Greece.
  14. Milan Sojic & Ljiljana Djurdjevic, 2008. "Monetary Policy Objectives and Istruments used by the Privileged National Bank of the Kingdom of Serbia (1884 - 1914)," Working Papers 87, Bank of Greece.
  15. Yuksel Gormez, 2008. "Banking in Turkey: History and Evolution," Working Papers 83, Bank of Greece.

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