Nation Brands and Foreign Direct Investment

WZB Markets and Politics Working Paper No. SP II 2010-06

36 Pages Posted: 25 Aug 2010

See all articles by Margarita M. Kalamova

Margarita M. Kalamova

Organisation for Economic Co-Operation and Development

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 1, 2010

Abstract

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

Kalamova, Margarita M. and Konrad, Kai A., Nation Brands and Foreign Direct Investment (May 1, 2010). WZB Markets and Politics Working Paper No. SP II 2010-06 , Available at SSRN: https://ssrn.com/abstract=1664445 or http://dx.doi.org/10.2139/ssrn.1664445

Margarita M. Kalamova

Organisation for Economic Co-Operation and Development ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Kai A. Konrad (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

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Centre for Economic Policy Research (CEPR)

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CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Germany

IZA Institute of Labor Economics

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Bonn, 53072
Germany

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