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What drives interdependence of FDI among host countries? : The role of geographic proximity and similarity in public debt

Title data

Alamá-Sabater, Luisa ; Heid, Benedikt ; Jiménez-Fernández, Eduardo ; Márquez-Ramos, Laura:
What drives interdependence of FDI among host countries? : The role of geographic proximity and similarity in public debt.
In: Economic Modelling. Vol. 58 (November 2016) . - pp. 466-474.
ISSN 0264-9993
DOI: https://doi.org/10.1016/j.econmod.2016.06.007

Official URL: Volltext

Abstract in another language

We investigate the drivers of interdependence between flows of foreign direct investment (FDI), focusing on two potential channels: interdependence between geographically close FDI destination countries, and between destination countries with similar levels of public debt. Using data on bilateral FDI flows between the 27 EU member countries in 2007, we find that in addition to geographic proximity, similarity in public debt levels drives cross-country correlation in FDI inflows. The public debt threshold of 60% of GDP prescribed by the Maastricht Treaty is a crucial driver of interdependence between FDI inflows. FDI inflows are correlated within the group of compliant countries as well as within the group of non-compliers. This is consistent with the fact that foreign investors distinguish between countries which violate this Maastricht criterion and those that do not.

Further data

Item Type: Article in a journal
Refereed: Yes
Keywords: Foreign direct investment; Financial contagion; Spatial econometrics; Fuzzy metrics; Public debt; Maastricht Treaty
Subject classification: JEL Classification: F21; F42; F44; F45
Institutions of the University: Faculties > Faculty of Law, Business and Economics > Department of Economics > Lehrstuhl Volkswirtschaftslehre VI: Empirische Wirtschaftsforschung
Faculties > Faculty of Law, Business and Economics > Department of Economics > Lehrstuhl Volkswirtschaftslehre VI: Empirische Wirtschaftsforschung > Lehrstuhl für Volkswirtschaftslehre VI: Empirische Wirtschaftsforschung - Univ.-Prof. Dr. Mario Larch
Profile Fields > Emerging Fields > Innovation and Consumer Protection
Faculties
Faculties > Faculty of Law, Business and Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics
Profile Fields
Profile Fields > Emerging Fields
Result of work at the UBT: Yes
DDC Subjects: 300 Social sciences > 330 Economics
Date Deposited: 26 Aug 2016 09:56
Last Modified: 26 Aug 2016 09:56
URI: https://eref.uni-bayreuth.de/id/eprint/34286