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Pattern of Foreign Direct Investment in Emerging Economies: An Exploration

  • Patibandla, Murali

    (Department of International Economics and Management, Copenhagen Business School)

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    Until recently major part of FDI flows had been among developed economies with similar relative factor endowments, income levels and market institutions such as property rights regimes. Consequently, major theoretical streams of FDI in economics could simplify FDI as a substitute for intra-industry trade by incorporating transportation costs and economies of scale (multi-plants). In the recent years, developing economies have increased their share of FDI inflows significantly (40%). Explanation of magnitude and pattern of FDI into developing economies requires a complex ray of factors. This is because these economies differ significantly from developed economies and also among each other in economic development levels and endowment of market institutions. This paper attempts to develop a conceptual framework to explain pattern of FDI in developing economies by identifying the determinants on the supply and demand side and market institutional conditions. Differences in the endowment of the factors in a set determine the pattern of FDI in these economies. This paper illustrates this by taking the case study of China and India.

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    File URL: http://openarchive.cbs.dk/cbsweb/handle/10398/6553
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    Paper provided by Copenhagen Business School, Department of International Economics and Management in its series Working Papers with number 1-2001.

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    Length: 37 pages
    Date of creation: 01 Feb 2001
    Date of revision:
    Handle: RePEc:hhb:cbsint:2001-001
    Contact details of provider: Postal:
    Department of International Economics and Management, Copenhagen Business School, Howitzvej 60, DK-2000 Frederiksberg, Denmark

    Phone: +45 3815 2515
    Fax: +45 3815 2500
    Web page: http://www.cbs.dk/departments/int/
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    8. David D. Li, 1996. "A Theory of Ambiguous Property Rights in Transition Economies: The Case of the Chinese Non-State Sector," William Davidson Institute Working Papers Series 8, William Davidson Institute at the University of Michigan.
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