Cross-national Distance and FDI: The Moderating Role of Host Country Local Demand

Nicholas Bailey and Sali Li

Journal of International Management, 2015, vol. 21, issue 4, 267-276

Abstract: In this paper, we draw on the demand-side perspective to suggest that host country local demand influences the relationship between cross-national distance and foreign direct investment (FDI). Using FDI outflows from the United States to a cross-sectional sample of 110 host countries over the period of 2006–2011, we find that distance negatively influences FDI, largely confirming previous research. However, our results also suggest that a host country's local demand mitigates the negative relationship between geographic, cultural and administrative distance and FDI outflows, while it aggravates the negative effect of political distance on FDI.

Keywords: Cross-national distance; Host country demand; FDI (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intman:v:21:y:2015:i:4:p:267-276

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DOI: 10.1016/j.intman.2014.11.002

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