Do Natural Resources Attract Non-Resource FDI?
AbstractA new and extensive panel of outward non-resource and resource FDI is used to obtain panel error-correction and estimates with spatial lags of the determinants of non-resource and resource FDI. Our main findings are as follows. First, for those countries which were not a resource producer before, a resource discovery causes non-resource FDI to fall by 16% in the short run and by 68% in the long run. Second, for those countries which wre already a resource producer, a doubling of resource rents induces a 12.4% fall in non-resource FDI. Third, on average, teh contractin in non-reosurce FDI outweighs the boom in resource FDI. Aggregate FDI falls by 4% if the resource bonanza is doubled. Finally, these negative effects on non-resource FDI are amplified through the positive spatial lags in non-resource FDI. We also find that resource FDI is vertical wheras non-resource FDI is of the export-fragmentation variety. Our main findings are robust to different measures of resource reserves and the oil price and to allowing for sample selection bias..
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Bibliographic InfoPaper provided by Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford in its series OxCarre Working Papers with number 051.
Date of creation: 2010
Date of revision:
outward non-resource and resource FDI; subsoil assets; co-integration tests; spatial econmetrics; hydrocarbon reserves; external margin; sample selection bias;
Other versions of this item:
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-27 (All new papers)
- NEP-ENE-2010-11-27 (Energy Economics)
- NEP-INT-2010-11-27 (International Trade)
- NEP-RES-2010-11-27 (Resource Economics)
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.:
- Joao Santos Silva & Silvana Tenreyro, 2005.
"The Log of Gravity,"
CEP Discussion Papers
dp0701, Centre for Economic Performance, LSE.
- Joao Santos Silva & Silvana Tenreyro, 2005. "The log of gravity," LSE Research Online Documents on Economics 3744, London School of Economics and Political Science, LSE Library.
- Santos Silva, Joao & Tenreyro, Silvana, 2005. "The Log of Gravity," CEPR Discussion Papers 5311, C.E.P.R. Discussion Papers.
- Hayat, Arshad, 2014. "FDI and Economic Growth: The Role of Natural Resources," MPRA Paper 57021, University Library of Munich, Germany.
- Torfinn Harding & Anthony J Venables, 2013.
"The Implications of Natural Resource Exports for Non-Resource Trade,"
OxCarre Working Papers
103, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
- Harding, Torfinn & Venables, Anthony J, 2013. "The implications of natural resource exports for non-resource trade," CEPR Discussion Papers 9318, C.E.P.R. Discussion Papers.
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