Testing an Extended Knowledge-Capital Model of Foreign Direct Investment: The Role of Public Knowledge Inputs
Year: 2024
Type: article
Abstract: The knowledge-capital model explains outward foreign direct investment (FDI) of a country from its relative abundance of its knowledge assets. Early versions of the knowledge-capital theory model these assets as if they were only the results of knowledge investments by private firms. We extend the theory by a formal model of the public-private interaction in knowledge development. This sheds light on the role of the origin country of multinationals. The paper extracts four testable predictions from the model. We use the inter-country variation in national knowledge-creation systems and FDI performance to test the model using a new dataset; it holds knowledge-creation indicators for about 200 countries over the period 2000-2020. Based on a range of non-parametric tests, we can corroborate that the basic tenet of the knowledge-capital model is correct. Moreover, the results show the important role of public knowledge production for outward FDI.
Source: Journal of Information Economics
DOI: 10.58567/jie02040005
Author: Henk L. M. Kox
Institution: Tilburg University
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4406402895