Journal article
Gravity-model specification for foreign direct investment: A case of the Asia-Pacific economies
The Journal of business and economic studies (Fairfield, Conn.), Vol.5(1), pp.33-42
01 Apr 1999
Abstract
Whether the gravity-model specification can be used to estimate the bilateral flows of foreign direct investment (FDI) is explored. The log-linear FDI equation specifies that FDI flows from home country to host country can be explained by supply conditions at the home country, by demand conditions at the host country, and by other economic forces either assisting or resisting the flows' movements. Estimation results using approximately 200 observations of bilateral FDI flows each year during the period from 1987 to 1993, with emphasis on the Asia-Pacific region, show that FDI flows in the region are driven more by market size and income in the home country than those factors in the host country. It is also evident that the geographic location factor is not a significant resistance nor assistance factor for FDI flows. Overall, the performance of fit to the data is good and statistical inference of the model is economically reasonable, suggesting the usefulness of the gravity-model specification for bilateral FDI flows.
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Details
- Title
- Gravity-model specification for foreign direct investment: A case of the Asia-Pacific economies
- Creators
- Susan StoneBang Nam Jeon
- Publication Details
- The Journal of business and economic studies (Fairfield, Conn.), Vol.5(1), pp.33-42
- Publisher
- Northeast Business & Economics Association
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Identifiers
- 991019335480904721