Nation Brands and Foreign Direct Investment
WZB Markets and Politics Working Paper No. SP II 2010-06
36 Pages Posted: 25 Aug 2010
Date Written: May 1, 2010
We study the explanatory role of fundamentals versus the effects of nation brands for the size of foreign direct investment (FDI) flows. Using the EUROSTAT data on FDI flows we find that the Anholt Nation Brands Index has a significant and strong impact on FDI flows in a multi-variate analysis that is based on the knowledge-capital (KC) model of FDI. Our results suggest that the nation brands index accounts for important aspects of FDI decisions that are not captured in fundamental data which explain FDI in the standard foreign trade approach to FDI.
Keywords: Country stereotypes, foreign direct investment, knowledge-capital model, nation brands, governance
JEL Classification: F23, M3
Suggested Citation: Suggested Citation