Contrasting the dynamic patterns of manufacturing and service FDI: Evidence from transition economies
We contribute to the foreign direct investment (FDI) literature by providing first empirical evidence on the relative importance of location factors for service and manufacturing FDI. This is of particular interest as the global stock of inward FDI in the service sector has become predominant in the last ten years. Based on a sectoral panel of eight new European member states in the period of 1998 to 2004 we perform a dynamic panel analysis allowing for individual adjustment periods across sectors. Results support our assumption that investment into the service sector, which is characterized by low installation costs, adjusts much faster to its desired level than manufacturing FDI. Furthermore, since services are mostly non-tradable, FDI into this sector is largely based on market-seeking motives while manufacturing FDI is also driven by international price competitiveness measured via real unit labor costs.
|Date of creation:||Jan 2008|
|Contact details of provider:|| Postal: Welthandelsplatz 1, 1020 Vienna, Austria|
Web page: http://www.wu.ac.at/economics/en
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Smarzynska Javorcik, Beata, 2004.
"The composition of foreign direct investment and protection of intellectual property rights: Evidence from transition economies,"
European Economic Review,
Elsevier, vol. 48(1), pages 39-62, February.
- Smarzynska, Beata K., 2002. "The composition of foreign direct investment and protection of intellectual property rights : evidence from transition economies," Policy Research Working Paper Series 2786, The World Bank.
- Fazia Pusterla & Laura Resmini, 2005. "Where do foreign firms locate in transition Countries? An empirical investigation," ISLA Working Papers 20, ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy, revised Sep 2005.
- Kolstad, Ivar & Villanger, Espen, 2008. "Determinants of foreign direct investment in services," European Journal of Political Economy, Elsevier, vol. 24(2), pages 518-533, June.
- Ivar Kolstad & Espen Villanger, 2004. "Determinants of foreign direct investment in services," CMI Working Papers WP 2004: 2, CMI (Chr. Michelsen Institute), Bergen, Norway.
- V.N. Balasubramanyam, 2008. "Foreign Direct Investment," Chapters,in: International Handbook of Development Economics, Volumes 1 & 2, chapter 39 Edward Elgar Publishing.
- Hubert Janicki & Phanindra Wunnava, 2004. "Determinants of foreign direct investment: empirical evidence from EU accession candidates," Applied Economics, Taylor & Francis Journals, vol. 36(5), pages 505-509.
- Laura Resmini, 2000. "The Determinants of Foreign Direct Investment in the CEECs: New evidence from sectoral patterns," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(3), pages 665-689, November.
- Laura Resmini, 1999. "The Determinants of Foreign Direct Investment into the CEECs: New Evidence from Sectoral Patterns," LICOS Discussion Papers 8399, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- Peter Walkenhorst, 2004. "Economic Transition and the Sectoral Patterns of Foreign Direct Investment," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 40(2), pages 5-26, March.
- Peter Walkenhorst, 2004. "Economic Transition and the Sectoral Patterns of Foreign Direct Investment," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 40(2), pages 5-26, March.
- Frank Windmeijer, 2000. "A finite sample correction for the variance of linear two-step GMM estimators," IFS Working Papers W00/19, Institute for Fiscal Studies.
- Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
- Tom Doan, "undated". "LEVINLIN: RATS procedure to perform Levin-Lin-Chu test for unit roots in panel data," Statistical Software Components RTS00242, Boston College Department of Economics.
- Philip Stevens, 2002. "The Role of Efficiency as an Explanation of International Income Differences," NIESR Discussion Papers 205, National Institute of Economic and Social Research. Full references (including those not matched with items on IDEAS)