TY - JOUR
T1 - Estimating models of complex FDI
T2 - Are there third-country effects?
AU - Baltagi, Badi H.
AU - Egger, Peter
AU - Pfaffermayr, Michael
N1 - Funding Information:
Financial support from the Austrian Fonds zur Foerderung der wissenschaftichen Forschung through grant P17028-G05 is gratefully acknowledged. The authors would like to thank Harry Kelejian and three anonymous referees for their constructive comments and suggestions
PY - 2007/9
Y1 - 2007/9
N2 - The recent general equilibrium theory of trade and multinationals emphasizes the importance of third countries and the complex integration strategies of multinationals. Little has been done to test this theory empirically. This paper attempts to rectify this situation by considering not only bilateral determinants, but also spatially weighted third-country determinants of foreign direct investment (FDI). Since the dependency among host markets is particularly related to multinationals' trade between them, we use trade costs (distances) as spatial weights. Using panel data on U.S. industries and host countries observed over the 1989-1999 period, we estimate a "complex FDI" version of the knowledge-capital model of U.S. outward FDI by various recently developed spatial panel data generalized moments (GM) estimators. We find that third-country effects are significant, lending support to the existence of various modes of complex FDI.
AB - The recent general equilibrium theory of trade and multinationals emphasizes the importance of third countries and the complex integration strategies of multinationals. Little has been done to test this theory empirically. This paper attempts to rectify this situation by considering not only bilateral determinants, but also spatially weighted third-country determinants of foreign direct investment (FDI). Since the dependency among host markets is particularly related to multinationals' trade between them, we use trade costs (distances) as spatial weights. Using panel data on U.S. industries and host countries observed over the 1989-1999 period, we estimate a "complex FDI" version of the knowledge-capital model of U.S. outward FDI by various recently developed spatial panel data generalized moments (GM) estimators. We find that third-country effects are significant, lending support to the existence of various modes of complex FDI.
KW - Complex FDI
KW - Generalized moments (GM) estimators
KW - Mutlinational firms
KW - Panel econometrics
KW - Spatial econometrics
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U2 - 10.1016/j.jeconom.2006.09.009
DO - 10.1016/j.jeconom.2006.09.009
M3 - Article
AN - SCOPUS:34547144345
SN - 0304-4076
VL - 140
SP - 260
EP - 281
JO - Journal of Econometrics
JF - Journal of Econometrics
IS - 1
ER -