Hunting High and Low for Vertical FDI
AbstractRecently the two dominant models of foreign direct investment (FDI), the horizontal and vertical models, have been synthesized into the knowledge capital (KK) model. Empirical tests, however, have found that the horizontal model cannot be rejected in favor of the KK model. This paper suggests that this is because the empirical specifications used do not allow the vertical aspects of FDI to manifest themselves. By extending the specification, I find evidence of vertical FDI. In particular, when I use the stock of FDI as my measure of FDI activity I can reject the horizontal model in favor of the KK model and identify countries for which FDI is dominated by vertical investment.
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Bibliographic InfoPaper provided by University of Oregon Economics Department in its series University of Oregon Economics Department Working Papers with number 2002-12.
Date of creation: 01 Aug 2002
Date of revision: 01 Aug 2002
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Foreign Direct Investment; Vertical Investment; Horizontal Investment; Knowledge Capital.;
Other versions of this item:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
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