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Foreign Direct Investment in Developed Economies: A Comparison between European and non - European Countries

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  • Piteli, Eleni E.N.
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    Abstract

    We analyse the determinants of foreign direct investment (FDI) by multinational corporations (MNCs) in developed economies. We compare between EU and non-EU countries, in the context of an estimated equation derived from economic theory, which compares the main demand and supply-side determinants of FDI. We contribute to the literature in three ways. First, by employing different proxies for demand and supply-side factors. Second, by comparing between European and non-European developed countries. Third, by testing for the relative importance of total factor productivity (TFP) as a determinant of FDI. Our results are in line with theoretical predictions, but point to the importance of TFP as the determinant par excellence of FDI in developed countries. They also highlight differences even within developed European and non-European counties.

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    File URL: http://www.esri.ie/research/research_areas/international_economics/dynreg/papers/DynregWP44.pdf
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    Bibliographic Info

    Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number DYNREG44.

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    Length: 25 pages
    Date of creation: 2009
    Date of revision:
    Handle: RePEc:esr:wpaper:dynreg44

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    17. Williamson, Peter J, 1986. "Multinational Enterprise Behaviour and Domestic Industry Adjustment under Import Threat," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 359-68, August.
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    20. Paul Krugman, 1992. "A Dynamic Spatial Model," NBER Working Papers 4219, National Bureau of Economic Research, Inc.
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