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Revisiting the investment development path (IDP): A non linear fluctuation approach

Author

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  • Kayam, S.s.
  • Hisarciklilar, M.

Abstract

The investment development path (IDP) approach claims that countries go through five stages with respect to their net outward investment positions as they develop. Attempts to test its validity using time-series or cross-section estimation techniques were moderately successful and the functional specifications used did not reflect IDP structure well. In this study, we introduce a fluctuation function, which is obtained from the general solution of an exponential function reflecting a continuous compounding process. It has extra properties that help capture the idiosyncratic shape of IDP and gives parameter estimates that facilitate interpretation of the stage a country is at.

Suggested Citation

  • Kayam, S.s. & Hisarciklilar, M., 2009. "Revisiting the investment development path (IDP): A non linear fluctuation approach," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 9(2).
  • Handle: RePEc:eaa:ijaeqs:v:9:y2009:i:1_12
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    File URL: http://www.usc.es/economet/reviews/ijaeqs925.pdf
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    References listed on IDEAS

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    1. Bellak, Christian, 2000. "The investment development path of Austria," Department of Economics Working Paper Series 1156, WU Vienna University of Economics and Business.
    2. John H Dunning, 1988. "The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(1), pages 1-31, March.
    3. Rugman, Alan M, 1986. "New Theories of the Multinational Enterprise: An Assessment of Internalization Theory," Bulletin of Economic Research, Wiley Blackwell, vol. 38(2), pages 101-118, May.
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    Cited by:

    1. Oleg Mariyev & Igor Drapkin & Kristina Chukavina & Heiko Rachinger, 2016. "Determinants Of Fdi Inflows: The Case Of Russian Regions," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(4), pages 1244-1252.
    2. Drapkin, I. & Mariev, O. & Chukavina, K., 2015. "Inflow and Outflow Potentials of Foreign Direct Investment in the Russian Economy: Numerical Estimation Based on the Gravity Approach," Journal of the New Economic Association, New Economic Association, vol. 28(4), pages 75-95.

    More about this item

    Keywords

    investment development path; trigonometric function; nonlinear estimation;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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