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Determinants of bilateral foreing direct investment flows in the OECD, with a closer look at the former coummunist countries

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Abstract

The main purpose of this paper is to study the determinants of bilateral foreign direct investment (hereafter FDI) flows in OECD countries. Special emphasis is placed on the new Central and Eastern European members (Hungary, the Czech Republic and Poland) in order to assess whether they differ from those of the OECD on the whole. Our theoretical framework is based on the OLI paradigm (ownership, location, internalization) developed in Dunning (1974, 1980 and 1993). The panel data estimation takes into account the ideas suggested in Zhang and Markusen (1997). According to our findings the variables that can best explain the bilateral FDI flows within the OECD are: on the one hand, the technological superiority of the investor vis-à-vis the host and, on the other, the relative abundance of physical capital, the endowments of human capital, transport infrastructure, and the size of the host countries, which clearly act as a factor of attraction for FDI.

Suggested Citation

  • Carmela Martin & Francisco J. Velazquez, 2000. "Determinants of bilateral foreing direct investment flows in the OECD, with a closer look at the former coummunist countries," European Economy Group Working Papers 2, European Economy Group.
  • Handle: RePEc:eeg:euroeg:2
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    1. Martín, Carmela & Velazquez, Francisco J, 1997. "The Determining Factors of Foreign Direct Investment in Spain and the rest of the OECD: Lessons for CEECs," CEPR Discussion Papers 1637, C.E.P.R. Discussion Papers.
    2. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    3. Barro, Robert J. & Lee, Jong-Wha, 1993. "International comparisons of educational attainment," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 363-394, December.
    4. John H Dunning, 1980. "Towards an Eclectic Theory of International Production: Some Empirical Tests," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 11(1), pages 9-31, March.
    5. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
    6. Kenneth A. Froot, 1993. "Foreign Direct Investment," NBER Books, National Bureau of Economic Research, Inc, number froo93-1.
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    1. repec:spr:jknowl:v:8:y:2017:i:4:d:10.1007_s13132-016-0367-7 is not listed on IDEAS
    2. Chidlow, Agnieszka & Salciuviene, Laura & Young, Stephen, 2009. "Regional determinants of inward FDI distribution in Poland," International Business Review, Elsevier, vol. 18(2), pages 119-133, April.

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    Keywords

    foreing direct investment; Central and Eastern European Countries (CEECs);

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