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Investment promotion agencies: do they work?

  • Hayakawa, Kazunobu
  • Lee, Hyun-Hoon
  • Park, Donghyun

In this paper, we examine the role of investment promotion agencies (IPAs) in promoting outward FDI from Japan and Korea. Looking at two home countries enables us to control for both country-pair time-invariant characteristics and host country time-varying characteristics. Our empirical results suggest that home-country IPAs tend to be more effective in promoting outward FDI in politically risky host countries. However, this finding depends on whether the home-country firm is listed or unlisted. More specifically, we find that the positive effect of home country IPAs on outward FDI in politically risky countries is limited to unlisted home- country firms, which are widely assumed to be less competitive and productive.

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File URL: http://ir.ide.go.jp/dspace/bitstream/2344/935/1/ARRIDE_Discussion_No.272_hayakawa.pdf
File Function: First version, 2010
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Paper provided by Institute of Developing Economies, Japan External Trade Organization(JETRO) in its series IDE Discussion Papers with number 272.

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Date of creation: Dec 2010
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Publication status: Published in IDE Discussion Paper. No. 272. 2010. 12
Handle: RePEc:jet:dpaper:dpaper272
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  1. Chen, Maggie Xiaoyang & Moore, Michael O., 2010. "Location decision of heterogeneous multinational firms," Journal of International Economics, Elsevier, vol. 80(2), pages 188-199, March.
  2. Andrew K. Rose, 2005. "The Foreign Service and Foreign Trade: Embassies as Export Promotion," NBER Working Papers 11111, National Bureau of Economic Research, Inc.
  3. Charlton Andrew & Davis Nicholas, 2007. "Does Investment Promotion Work?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-21, August.
  4. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
  5. Shang-Jin Wei & Arvind Subramanian, 2003. "The WTO Promotes Trade, Strongly But Unevenly," IMF Working Papers 03/185, International Monetary Fund.
  6. Christoph Moser & Thorsten Nestmann & Michael Wedow, 2008. "Political Risk and Export Promotion: Evidence from Germany," The World Economy, Wiley Blackwell, vol. 31(6), pages 781-803, 06.
  7. Lederman, Daniel & Olarreaga, Marcelo & Payton, Lucy, 2010. "Export promotion agencies: Do they work?," Journal of Development Economics, Elsevier, vol. 91(2), pages 257-265, March.
  8. Kleinert, Jörn & Toubal, Farid, 2005. "Gravity for FDI," Center for European, Governance and Economic Development Research Discussion Papers 46, University of Goettingen, Department of Economics.
  9. Volpe Martincus, Christian & Carballo, Jerónimo, 2008. "Is export promotion effective in developing countries? Firm-level evidence on the intensive and the extensive margins of exports," Journal of International Economics, Elsevier, vol. 76(1), pages 89-106, September.
  10. Roberto Álvarez E. & Gustavo Crespi T., 2000. "Exporter performance and promotion instruments: Chilean empirical evidence," Estudios de Economia, University of Chile, Department of Economics, vol. 27(2 Year 20), pages 225-241, December.
  11. Salvador Gil & Rafael Llorca & José A. Martínez Serrano, 2008. "Measuring the impact of regional export promotion: The Spanish case," Papers in Regional Science, Wiley Blackwell, vol. 87(1), pages 139-146, 03.
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