Estimating Models of Complex FDI: Are There Third-Country Effects?

Badi Baltagi, Peter Egger and Michael Pfaffermayr

No 73, Center for Policy Research Working Papers from Center for Policy Research, Maxwell School, Syracuse University

Abstract: The recent general equilibrium theory of trade and multinationals emphasizes the importance of third countries and the complex integration strtegies 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 paticularly 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.

Keywords: multinational firms; complex FDI; panel econometrics; spatial econometrics; generalized moments (GM) estimators (search for similar items in EconPapers)
JEL-codes: C33 F14 F15 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2005-10
New Economics Papers: this item is included in nep-int
References: Add references at CitEc
Citations: View citations in EconPapers (47)

Downloads: (external link)
https://surface.syr.edu/cpr/91/ (application/pdf)

Related works:
Journal Article: Estimating models of complex FDI: Are there third-country effects? (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:max:cprwps:73

Access Statistics for this paper

More papers in Center for Policy Research Working Papers from Center for Policy Research, Maxwell School, Syracuse University 426 Eggers Hall, Syracuse, New York USA 13244-1020. Contact information at EDIRC.
Bibliographic data for series maintained by Katrina Fiacchi ().