What Drives FDI from Non-Traditional Sources? A Comparative Analysis of the Determinants of Bilateral FDI Flows

56 Pages Posted: 5 Jul 2012

See all articles by Maximiliano Sosa Andres

Maximiliano Sosa Andres

Towers Watson

Peter Nunnenkamp

University of Kiel

Matthias Busse

Ruhr-University Bochum; HWWI - Hamburg Institute of International Economics

Date Written: June 1, 2012

Abstract

Non-traditional source countries of FDI play an increasingly important role, notably in developing host countries. This raises the question of whether the determinants of FDI differ systematically between traditional and non-traditional source countries. We perform Logit and Poisson Pseudo Maximum Likelihood estimations drawing on UNCTAD’s database on bilateral FDI flows, including various emerging and developing countries as sources of FDI outflows. We find that economic geography variables are more relevant for FDI from non-traditional sources, while non-traditional investors appear to be as risk adverse as traditional investors. Access to raw materials represents a less important driving force of FDI from non-traditional sources. The differences are less pronounced for other types of FDI.

Keywords: FDI flows, types of FDI, source-host country pairs, location choices, gravity-type models

JEL Classification: F21

Suggested Citation

Sosa Andres, Maximiliano and Nunnenkamp, Peter and Busse, Matthias, What Drives FDI from Non-Traditional Sources? A Comparative Analysis of the Determinants of Bilateral FDI Flows (June 1, 2012). Towers Watson Technical Paper No. 2100529. Available at SSRN: https://ssrn.com/abstract=2100529 or http://dx.doi.org/10.2139/ssrn.2100529

Maximiliano Sosa Andres (Contact Author)

Towers Watson ( email )

875 Third Avenue
New York, NY 10022
United States

HOME PAGE: http://www.towerswatson.com

Peter Nunnenkamp

University of Kiel ( email )

D-24100 Kiel
Germany

Matthias Busse

Ruhr-University Bochum ( email )

Faculty of Management and Economics, GC 3/145
D-44780 Bochum, DE 44780
Germany

HWWI - Hamburg Institute of International Economics

Heimhuder Str. 71
Hamburg, 20148
Germany

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