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FDI Flows to Asia

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Author Info

  • Benoît Mercereau

Abstract

China''s dramatic success in attracting foreign direct investment (FDI) has raised concerns that it has success diverted FDI from other countries in Asia. We develop a new methodology to estimate crowding out, and we use it to investigate the impact of China''s emergence on FDI flows to Asia using data from 14 Asian economies from 1984 to 2002. The results suggest that China did not have much impact on FDI to other countries. In particular, lowincome economies, which compete with China for low-wage investment, and countries with low levels of education or scientific development do not seem to have been especially affected.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 05/189.

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Length: 30
Date of creation: 01 Sep 2005
Date of revision:
Handle: RePEc:imf:imfwpa:05/189

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Related research

Keywords: Foreign investment; fdi; bond; crowding out; direct investment; foreign direct investment; bond yield; bond yields; international finance; foreign investors; currency crisis; nominal exchange rate; financial system; foreign investor; technology transfers; international investment; host country; inward foreign direct investment; international financial statistics; investment decision;

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References

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  1. Philip Lane & Gian Maria Milesi-Ferretti, 2001. "THE EXTERNAL WEALTH OF NATIONS: Measures of Foreign Assets and Liabilities For Industrial and Developing Countries," CEG Working Papers 20012, Trinity College Dublin, Department of Economics.
  2. Eduardo Borensztein & Jose De Gregorio & Jong-Wha Lee, 1995. "How Does Foreign Direct Investment Affect Economic Growth?," NBER Working Papers 5057, National Bureau of Economic Research, Inc.
  3. Ricardo Hausmann & Eduardo Fernández-Arias, 2000. "Foreign Direct Investment: Good Cholesterol?," IDB Publications 6466, Inter-American Development Bank.
  4. Sun, Qian & Tong, Wilson & Yu, Qiao, 2002. "Determinants of foreign direct investment across China," Journal of International Money and Finance, Elsevier, vol. 21(1), pages 79-113, February.
  5. Lensink, Robert & White, Howard, 1998. "Does the Revival of International Private Capital Flows Mean the End of Aid?: An Analysis of Developing Countries' Access to Private Capital," World Development, Elsevier, vol. 26(7), pages 1221-1234, July.
  6. Warwick J. McKibbin & Wing Thye Woo, 2003. "The Consequences of China's WTO Accession for Its Neighbors," Asian Economic Papers, MIT Press, vol. 2(2), pages 1-38.
  7. Noorbakhsh, Farhad & Paloni, Alberto & Youssef, Ali, 2001. "Human Capital and FDI Inflows to Developing Countries: New Empirical Evidence," World Development, Elsevier, vol. 29(9), pages 1593-1610, September.
  8. Fernandez-Arias, Eduardo & DEC, 1994. "The new wave of private capital inflows : push or pull?," Policy Research Working Paper Series 1312, The World Bank.
  9. Barry P. Bosworth & Susan M. Collins, 1999. "Capital Flows to Developing Economies: Implications for Saving and Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(1), pages 143-180.
  10. Alan G. Ahearne & John G. Fernald & Prakash Loungani & John W. Schindler, 2003. "China and emerging Asia: comrades or competitors?," International Finance Discussion Papers 789, Board of Governors of the Federal Reserve System (U.S.).
  11. Barry Eichengreen & Yeongseop Rhee & Hui Tong, 2004. "The Impact of China on the Exports of Other Asian Countries," NBER Working Papers 10768, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Olaf Unteroberdoerster & Roberto Pereira Guimarães, 2006. "What's Driving Private Investment in Malaysia? Aggregate Trends and Firm-Level Evidence," IMF Working Papers 06/190, International Monetary Fund.
  2. Dalila NICET-CHENAF (GREThA-GRES) & Eric ROUGIER (GREThA-GRES), 2007. "Foreign Direct Investment: a comparative study of the attraction of Moroccan and Tunisian economies (In French)," Cahiers du GRES 2007-05, Groupement de Recherches Economiques et Sociales.
  3. 0smail Çevi_ & Burak Çamurdan, 2007. "The Economic Determinants of Foreign Direct Investment in Developing Countries and Transition Economies," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(3), pages 285-299.
  4. SALIKE, Nimesh, 2010. "Investigation of the "China effect" on crowding out of Japanese FDI: An industry-level analysis (1990-2004)," China Economic Review, Elsevier, vol. 21(4), pages 582-597, December.
  5. Lane, Philip R. & Schmukler, Sergio L., 2007. "The international financial integration of China and India," Policy Research Working Paper Series 4132, The World Bank.
  6. Salike, Nimesh, 2009. "Is China taking away foreign direct investment from other Asian economies?: An analysis of Japanese, US and Korean FDI," MPRA Paper 26583, University Library of Munich, Germany.
  7. 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.
  8. Aleksynska, Mariya & Havrylchyk, Olena, 2013. "FDI from the south: The role of institutional distance and natural resources," European Journal of Political Economy, Elsevier, vol. 29(C), pages 38-53.
  9. Resmini, Laura & Siedschlag, Iulia, 2013. "Is foreign direct investment to China crowding out the foreign direct investment to other countries?," China Economic Review, Elsevier, vol. 25(C), pages 1-16.
  10. Resmini, Laura, 2006. "Theoretical and Methodological Study on Comparative Advantages in Dynamic Growth Regions, Convergence and Inequalities Patterns," Papers DYNREG03, Economic and Social Research Institute (ESRI).
  11. Schiffbauer, Marc, 2006. "Theoretical and methodological study on the role of public policies in fostering innovation and growth," Papers DYNREG04, Economic and Social Research Institute (ESRI).

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