Year: 2011
Type: report
Abstract: Empirical studies of bilateral foreign direct investment (FDI) activity show substantial differences in specifications with little agreement on the set of covariates that are (or should be) included.We use Bayesian statistical techniques that allow one to select from a large set of candidates those variables most likely to be determinants of FDI activity.The variables with consistently high inclusion probabilities are traditional gravity variables, cultural distance factors, parent-country per capita GDP, relative labor endowments, and regional trade agreements.Variables with little support for inclusion are multilateral trade openness, host country business costs, host-country infrastructure (including credit markets), and host-country institutions.Of particular note, our results suggest that many covariates found significant by previous studies are not robust.
DOI: 10.3386/w16704
Authors: Bruce Blonigen, Jeremy Piger
Institutions: National Bureau of Economic Research, University of Oregon
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1761886555