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Modelling FDI based on a spatially augmented gravity model: Evidence for Central and Eastern European Countries

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Author Info

  • Markus Leibrecht

    ()
    (Department for Economics, Leuphana University Lueneburg, Germany)

  • Aleksandra Riedl

    ()
    (Austrian National Bank)

Abstract

Based on a spatially augmented gravity model the current paper isolates spatial interrelationships in Foreign Direct Investment (FDI) to Central and Eastern European Countries (CEECs) not only across the destination but also across the origin country dimension of FDI. Results show that: (i) spatial interrelationships across destination countries are present and are consistent with the predom- inance of vertical-complex FDI in total FDI; (ii) spatial correlation across origin countries is given in earlier years of transition, while demonstration and competition effects cancel over the whole sample period; and (iii) agglomeration forces gain in importance for FDI to CEECs.

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Bibliographic Info

Paper provided by University of Lüneburg, Institute of Economics in its series Working Paper Series in Economics with number 239.

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Length: 34 pages
Date of creation: Apr 2012
Date of revision:
Handle: RePEc:lue:wpaper:239

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Web page: http://leuphana.de/institute/ivwl.html

Related research

Keywords: Foreign Direct Investment; Spatial Econometrics; Central and Eastern Europe; Third country effects;

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