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Pattern of Interdependence of Aggregate FDI from the Same Source Country

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  • Francis M. Kemegue

    () (Department of Economics, University of Pretoria)

Abstract

This paper explores the possibility that monitoring resources explain the clustering in space of aggregate FDI from the same source country. Theoretically, the paper shows that independently of any institutional incentive setting, costly monitoring incites headquarters to locate new plants where monitoring resources are relatively cheap. Clustering of rms from the same source country is therefore interpreted as information sourcing. Empirical application finds that the importance of geographic neighbors to the location choice of US non-manufacturing FDI in Europe conform to the advanced hypothesis.

Suggested Citation

  • Francis M. Kemegue, 2009. "Pattern of Interdependence of Aggregate FDI from the Same Source Country," Working Papers 200928, University of Pretoria, Department of Economics.
  • Handle: RePEc:pre:wpaper:200928
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    File URL: http://www.up.ac.za/media/shared/61/WP/wp_2009_28.zp39400.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Foreign direct investment; Spillovers; geographic agglomeration;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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