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Is ‘no news’ really ‘good news’? Country visibility and FDI location choice

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  • Laurel Adams
  • Rebecca Neumann
  • Saleh S. Tabrizy

Abstract

In choosing where to invest, firms seek out information on a set of possible locations. Information asymmetries may make country visibility particularly important in decisions to locate investment abroad. We develop a country visibility index based on international news stories in The Economist, and show that broad country visibility is at least as important in attracting foreign direct investment (FDI) as other specific investment promotion activities or proxies for information frictions. Controlling for standard gravity model determinants of FDI, we find that greater visibility of developing countries, in particular lower middle- and low-income countries, increases the investment that they receive from US multinational corporations.

Suggested Citation

  • Laurel Adams & Rebecca Neumann & Saleh S. Tabrizy, 2018. "Is ‘no news’ really ‘good news’? Country visibility and FDI location choice," International Review of Applied Economics, Taylor & Francis Journals, vol. 32(4), pages 489-524, July.
    • Handle: RePEc:taf:irapec:v:32:y:2018:i:4:p:489-524
    DOI: 10.1080/02692171.2017.1351925
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    Cited by:

    1. Alvaro Cuervo-Cazurra & Bernardo Silva-Rêgo & Ariane Figueira, 2022. "Financial and fiscal incentives and inward foreign direct investment: When quality institutions substitute incentives," Journal of International Business Policy, Palgrave Macmillan, vol. 5(4), pages 417-443, December.

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