Why Does FDI Go Where it Goes? New Evidence from the Transitional Economies

34 Pages Posted: 10 Sep 2003

See all articles by Yuko Kinoshita

Yuko Kinoshita

International Monetary Fund (IMF); University of Michigan, William Davidson Institute; Centre for Economic Policy Research (CEPR)

Nauro F. Campos

Brunel University London - Economics and Finance; Centre for Economic Policy Research (CEPR); University of Michigan at Ann Arbor - The William Davidson Institute; IZA Institute of Labor Economics

Date Written: July 2003

Abstract

This Paper examines the importance of agglomeration economies and institutions vis-a-vis initial conditions and factor endowments in explaining the locational choice of foreign investors. Using a unique panel data set for 25 transition economies between 1990-98, we find that the main determinants are institutions, agglomeration and trade openness. We find important differences between the Eastern European and Baltic countries, on the one hand, and the former Soviet Union countries on the other: in the latter group, natural resources and infrastructure matter, while agglomeration matters only for the former group.

Keywords: Foreign direct investment, transition economies

JEL Classification: C33, F21, O16, O23, P27

Suggested Citation

Kinoshita, Yuko and Campos, Nauro F., Why Does FDI Go Where it Goes? New Evidence from the Transitional Economies (July 2003). CEPR Discussion Paper No. 3984. Available at SSRN: https://ssrn.com/abstract=443060

Yuko Kinoshita (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States
202-623-5442 (Phone)
202-623-6069 (Fax)

University of Michigan, William Davidson Institute

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Nauro F. Campos

Brunel University London - Economics and Finance ( email )

Uxbridge UB8 3PH
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Michigan at Ann Arbor - The William Davidson Institute

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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