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The investment development path of newly developed countries

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  • Juan Duran
  • Fernando Ubeda

Abstract

According to foreign direct investment (FDI) path theory, developed countries are grouped into two phases, known as the fourth and fifth phases. Fourth-phase countries (newly developed economies) show a technological and institutional "gap" in comparison with fifth-phase economies, which explains their lesser capacity to generate direct investment. We found that these countries, which were less developed economies in the 1980s, had undergone a deep structural transformation. This transformation encouraged the multinationalization of firms, which is a differentiating element and one outcome of their development process. These results have clear policy implications: the governments of newly developed countries should take steps to increase the endowment of knowledge-intensive assets. The main contribution of this paper is the theoretical reformulation of the fourth phase of the investment development path theory.

Suggested Citation

  • Juan Duran & Fernando Ubeda, 2005. "The investment development path of newly developed countries," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(1), pages 123-137.
  • Handle: RePEc:taf:ijecbs:v:12:y:2005:i:1:p:123-137
    DOI: 10.1080/1357151042000323076
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    References listed on IDEAS

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    1. Narula, Rajneesh & Wakelin, Katharine, 1998. "Technological competitiveness, trade and foreign direct investment," Structural Change and Economic Dynamics, Elsevier, vol. 9(3), pages 373-387, September.
    2. John Dunning & Chang-Su Kim & Jyh-Der Lin, 2001. "Incorporating Trade into the Investment Development Path: A Case Study of Korea and Taiwan," Oxford Development Studies, Taylor & Francis Journals, vol. 29(2), pages 145-154.
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    Cited by:

    1. Alexandros Ragoussis, 2011. "The investment development path in space," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(3), pages 527-541, September.

    More about this item

    Keywords

    Investment Development Path; Outward Direct Investment Stock; Inward Direct Investment Stock; Economic Development; Technological Gap; JEL Classifications: F21; F23; F43;

    JEL classification:

    • 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
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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