How Different are FDI and FPI Flows?: Does Distance Alter the Composition of Capital Flows?
AbstractThe availability of bilateral capital flows between countries has given rise to a number of papers attempting to understand trends and determinants of capital flows between country pairs. Almost without exception, the papers find that the gravity model fits the data quite well. Specifically, while economic sizes of the host and source (measured by GDP, population etc) appear to positively impact bilateral flows in most cases, distance -- broadly proxying some sort of transactions and / or information frictions -- stands out as consistently hindering all types of capital flows. But does greater distance hinder both foreign portfolio investment (FPI) and foreign direct investment (FDI) flows equally? In other words, does distance change the composition of capital flows? This is the specific question that this paper focuses on, differentiating between total FDI, FDI via mergers and acquisitions (M&As) and FPI.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 092011.
Length: 32 pages
Date of creation: Mar 2011
Date of revision:
Contact details of provider:
Postal: 55th Floor , Two International Finance Centre , 8 Finance Street , Central, Hong Kong
Phone: (852)2878 1978
Fax: (852)2878 7006
Web page: http://www.hkimr.org
More information through EDIRC
Distance; Foreign Direct Investment (FDI); Foreign Portfolio Investment (FPI); Gravity; Mergers and Acquisitions (M&As);
Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- di Giovanni, Julian, 2002.
"What Drives Capital Flows? The Case of Cross-Border M&A Activity and Financial Deepening,"
Center for International and Development Economics Research, Working Paper Series
qt7nq6d7wp, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
- di Giovanni, Julian, 2005. "What drives capital flows? The case of cross-border M&A activity and financial deepening," Journal of International Economics, Elsevier, vol. 65(1), pages 127-149, January.
- Julian di Giovanni & Contact: email@example.com, 2003. "What Drives Capital Flows? The Case of Cross-Border M&A Activity and Financial Deepening," International Trade 0303002, EconWPA.
- Javorcik, Beata S. & Özden, Çaglar & Spatareanu, Mariana & Neagu, Cristina, 2011.
"Migrant networks and foreign direct investment,"
Journal of Development Economics,
Elsevier, vol. 94(2), pages 231-241, March.
- Javorcik, Beata S. & Ozden, Caglar & Spatareanu, Mariana & Neagu, Cristina, 2006. "Migrant networks and foreign direct investment," Policy Research Working Paper Series 4046, The World Bank.
- Beata S. Javorcik & Çaglar Özden & Mariana Spatareanu & Cristina Neagu, 2006. "Migrant Networks and Foreign Direct Investment," Working Papers Rutgers University, Newark 2006-003, Department of Economics, Rutgers University, Newark.
- Eichengreen, Barry & Tong, Hui, 2007.
"Is China's FDI coming at the expense of other countries?,"
Journal of the Japanese and International Economies,
Elsevier, vol. 21(2), pages 153-172, June.
- Barry Eichengreen & Hui Tong, 2005. "Is China's FDI Coming at the Expense of Other Countries?," NBER Working Papers 11335, National Bureau of Economic Research, Inc.
- Chuhan, Punam & Perez-Quiros, Gabriel & Popper, Helen, 1996. "International capital flows : do short-term investment and direct investment differ?," Policy Research Working Paper Series 1669, The World Bank.
- Finn Marten Körner & Hans-Michael Trautwein, 2013. "Sovereign Credit Ratings and the Transnationalization of Finance - Evidence from a Gravity Model of Portfolio Investment," ZenTra Working Papers in Transnational Studies 20 / 2013, ZenTra - Center for Transnational Studies, revised Feb 2014.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (HKIMR).
If references are entirely missing, you can add them using this form.