When Near is Far and Far is Near: A Quantile Regression Model of FDI, Geographic Location and Connectivity

33 Pages Posted: 8 Oct 2019 Last revised: 23 Oct 2019

See all articles by Lilac Nachum

Lilac Nachum

City University of New York - Allen G. Aaronson Department of Marketing & International Business

Grigorios Livanis

Ohio University - College of Business

Hyokyoung Grace Hong

affiliation not provided to SSRN

Date Written: 2017

Abstract

Building on sociology theory of space, we conceptualize physical geography as separated from its constructed connotations and suggest that the impact of geographic location on FDI is contingent upon the constructed qualities. These qualities include countries’ unilateral economic and institutional characteristics, as they define the meaning of the physical, and connectivity to other countries, which shapes the consequences of the physical for global integration. Quantile regression analyses of FDI flows and stocks to all countries that received FDI during 1980-2017 confirm these predictions and reveal nuanced interdependencies between the contingencies. The contingency effects vary considerably across the FDI distribution and diminish as FDI volumes increase. The findings entail that geography is not destiny, and call for the development of a theory in which geographic location is treated as an endogenous country characteristic, whose consequences for FDI are subject to actions of policy makers and MNEs.

Suggested Citation

Nachum, Lilac and Livanis, Grigorios and Hong, Hyokyoung Grace, When Near is Far and Far is Near: A Quantile Regression Model of FDI, Geographic Location and Connectivity (2017). Baruch College Zicklin School of Business Research Paper No. 2019-10-03. Available at SSRN: https://ssrn.com/abstract=3412523 or http://dx.doi.org/10.2139/ssrn.3412523

Lilac Nachum (Contact Author)

City University of New York - Allen G. Aaronson Department of Marketing & International Business ( email )

One Bernard Baruch Way, B12-240
New York, NY 10010-5585
United States

Grigorios Livanis

Ohio University - College of Business ( email )

Athens, OH 45701-2979
United States

Hyokyoung Grace Hong

affiliation not provided to SSRN

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