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Relative factor abundance and FDI factor intensity in developed countries

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  • Alfons Palangkaraya
  • Andreas Waldkirch

Abstract

This study looks at the link between the patterns of trade-revealed comparative advantage and net inward foreign direct investment in five developed countries: the United Kingdom, the United States, Japan, France, and Italy. It thus extends earlier work by Maskus and Webster (1995) who analyzed two countries, the United Kingdom and South Korea. Despite assertions in the literature that market access is the primary motive for foreign direct investment flows among developed countries, this study shows that there is a significant role for comparative advantage in determining inflows of foreign direct investment in developed countries, especially in the services industry.

Suggested Citation

  • Alfons Palangkaraya & Andreas Waldkirch, 2008. "Relative factor abundance and FDI factor intensity in developed countries," International Economic Journal, Taylor & Francis Journals, vol. 22(4), pages 489-508.
    • Handle: RePEc:taf:intecj:v:22:y:2008:i:4:p:489-508
    DOI: 10.1080/10168730802497577
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    More about this item

    Keywords

    foreign direct investment; comparative advantage; Heckscher-Ohlin-Vanek;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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