Abstract
Different fundamental methodological spatial econometric issues are discussed not yet addressed by the existent empirical literature on FDI and third country effects that explains why it has failed to find results consistent with formal theory. This is demonstrated by taking the baseline spatial econometric model developed by Blonigen et al. (Eur Econ Rev 51:1303–1325, 2007) as point of departure and using US data on outbound FDI into 20 European countries observed over the 1999–2008 period. By refining the spatial econometric approach, we find significant empirical evidence in favor of competition among European countries in attracting US companies, and results that are consistent with export-platform and pure vertical FDI motives.
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Notes
Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
Blonigen et al. (2007) include many countries without considering their neighbors, such as Egypt.
Source: Bureau of Economic Analysis, US direct investment abroad: Operations of US parent companies and their foreign affiliates Retrieved from http://www.bea.gov/international/index.htm#omc on 05-02-2011.
Blonigen et al. (2007) use a composite index based on measures of political, financial and economic risk indicators, but data to construct this index are not publically available.
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The authors thank two anonymous reviewers for their helpful comments on a previous version of this paper.
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Regelink, M., Paul Elhorst, J. The spatial econometrics of FDI and third country effects. Lett Spat Resour Sci 8, 1–13 (2015). https://doi.org/10.1007/s12076-014-0125-z
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DOI: https://doi.org/10.1007/s12076-014-0125-z