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Bilateral FDI potentials for Austria

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  • Peter Egger

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Abstract

Trade economists have for long considered gravity models to estimate unexhausted potentials for bilateral trade. Similar to the discrepancy between "normal" and "actual" bilateral trade, one may ask the question about the difference between "normal" and actual bilateral multinational activity. However, with multinational activity, zero bilateral data and heteroscedasticity are very important, even more so than with trade data. Therefore, this paper suggests using generalized linear rather than log-linear models to specify "normal" FDI and obtain estimates of unexhausted FDI potentials. I use panel data on Austria?s bilateral multinational activity across 25 countries and 7 country-blocs, 4 sectors and 13 years to illustrate the disadvantage of log-linear model estimation at quasi-maximum likelihood estimation.
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Suggested Citation

  • Peter Egger, 2010. "Bilateral FDI potentials for Austria," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 37(1), pages 5-17, February.
  • Handle: RePEc:kap:empiri:v:37:y:2010:i:1:p:5-17
    DOI: 10.1007/s10663-009-9116-5
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Christian Zeller & Andreas Hametner & Koen Smet & Markus Seiwald, 2014. "Internationale Expansion in der pharmazeutischen Industrie Österreichs," FIW Research Reports series V-004, FIW.
    2. Elisabeth Christen, 2014. "Austria's Foreign Trade and Investment Relations with the Western Balkan Countries," WIFO Monatsberichte (monthly reports), WIFO, vol. 87(3), pages 197-211, March.
    3. repec:dau:papers:123456789/10605 is not listed on IDEAS
    4. Rafael Cezar & Octavio Escobar, 2015. "Institutional distance and foreign direct investment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(4), pages 713-733, November.
    5. Garrett, Jinzhuo Z., 2016. "Explaining asymmetries in bilateral FDI flows," International Review of Economics & Finance, Elsevier, vol. 41(C), pages 155-171.
    6. Octavio Escobar, 2011. "The location pattern of FDI in Mexico after NAFTA," ERSA conference papers ersa10p804, European Regional Science Association.
    7. Badi H. Baltagi & Peter Egger & Michael Pfaffermayr, 2014. "Panel Data Gravity Models of International Trade," CESifo Working Paper Series 4616, CESifo Group Munich.

    More about this item

    Keywords

    Multinational activity; Gravity model; Trade potentials; F14; F15; F21; F23;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • 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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