Guided Through the 'Red Tape'? Information Sharing and Foreign Direct Investment

41 Pages Posted: 20 Feb 2013

See all articles by Ragnhild Balsvik

Ragnhild Balsvik

Norwegian School of Economics (NHH) - Department of Economics

Line Tondel

Chr. Michelsen Institute (CMI)

Date Written: January 2, 2013

Abstract

What drives the observed tendency of new FDI, other things equal, to be attracted to locations where many other foreign investors are located? One explanation in the literature on FDI location is that expected benefits from agglomeration externalities make firms want to locate in agglomerated regions. Alternatively, potential investors get information about conditions in a host from firms in their own business network that already have experience from that country. We study how Norwegian FDI location choice depends on previous Norwegian presence, using information about institutional quality to separate the impact of information sharing from agglomeration externalities. The impact of previous Norwegian investors is larger in countries with low institutional quality. We interpret this as consistent with the presence of information sharing among Norwegian investors.

Keywords: FDI, location choice, networks, information, agglomeration

JEL Classification: F23, D80

Suggested Citation

Balsvik, Ragnhild and Tondel, Line, Guided Through the 'Red Tape'? Information Sharing and Foreign Direct Investment (January 2, 2013). NHH Dept. of Economics Discussion Paper No. 03/2013, Available at SSRN: https://ssrn.com/abstract=2220181 or http://dx.doi.org/10.2139/ssrn.2220181

Ragnhild Balsvik (Contact Author)

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

Line Tondel

Chr. Michelsen Institute (CMI) ( email )

P.O.Box 6033 Bedriftssenteret
N-5892 Bergen, 5006
Norway

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
23
Abstract Views
493
PlumX Metrics