Hunting High and Low for Vertical FDI
Recently the horizontal and vertical models of foreign direct investment (FDI) have been synthesized into the knowledge-capital (KK) model. Empirical tests, however, find that the horizontal model cannot be rejected in favor of the KK model. I suggest this is because the empirical specifications are too restrictive for vertical FDI to manifest itself. Using an alternative specification, I find evidence of vertical FDI. In particular, when I use the stock of FDI I can reject the horizontal model in favor of the knowledge-capital model and identify countries for which FDI is dominated by vertical investment. Copyright � 2008 The Author.
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Volume (Year): 16 (2008)
Issue (Month): 2 (05)
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