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China and central and eastern European countries : regional networks, global supply chain, or international competitors?

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  • Fung , K.C.
  • Korhonen, Iikka
  • Li, Ke
  • Ng, Francis

Abstract

China has emerged as one of the top recipients of foreign direct investment in the world. Meanwhile, the successful transition experience of many Central and Eastern European countries has also allowed them to attract an increasing share of global foreign direct investment. In this paper, the authors use a panel data set to investigate whether foreign direct investment flows to these two regions are complements, substitutes, or independent of each other. Taking into account the role of host country characteristics - such as market size, degree of trade liberalization, and human capital - the authors find no evidence that foreign direct investment flows to one region are at the expense of those to the other. Instead, the results suggest that foreign direct investment flows are driven by distinct regional production networks (and thus are largely independent of each other) and the development of global supply chains (indicating that foreign direct investment flows are complementary).

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4689.

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Date of creation: 01 Aug 2008
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Handle: RePEc:wbk:wbrwps:4689

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Keywords: Debt Markets; Foreign Direct Investment; Emerging Markets; Economic Theory&Research; Investment and Investment Climate;

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Cited by:
  1. Clifton, Judith & Díaz-Fuentes, Daniel & Revuelta, Julio, 2009. "Explaining Telecoms and Electricity Internationalization in the European Union: A Political Economy Perspective," MPRA Paper 33037, University Library of Munich, Germany.
  2. Ilya Bolotov & Kateřina Gajdušková, 2013. "Srovnání otevřenosti trhů Brazílie, Ruska, Indie a Číny a zemí střední a východní Evropy," Současná Evropa, University of Economics, Prague, vol. 2013(3), pages 9-34.
  3. Michalopoulos, Constantine & Ng, Francis, 2013. "Trends in developing country trade 1980-2010," Policy Research Working Paper Series 6334, The World Bank.
  4. 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.
  5. Mariya Aleksynska & Olena Havrylchyk, 2011. "FDI from the South: the Role of Institutional Distance and Natural Resources," Working Papers 2011-05, CEPII research center.

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