Bilateral FDI flows
Subtitle: threshold barriers and productivity shocks
By: Assaf Razin, Efraim Sadka, Hui Tong.
Contributors: Sadka, Efraim.; Hui Tong.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11639; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11639.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Investments, Foreign -- Mathematical models.; Industrial productivity -- Mathematical models.
Description: "A positive productivity shock in the host country tends typically to increase the volume of the desired FDI flows to the host country, through the standard marginal profitability effect.  But, at the same time, such a shock may lower the likelihood of making any new FDI flows by the source country, through a total profitability effect, derived from the a general-equilibrium increase in domestic input prices.  This is the gist of the theory that we develop in the paper.  For a sample of 62 OECD and Non-OECD countries over the period 1987-2000, we provide supporting evidence for the existence of such conflicting effects of productivity change on bilateral FDI flows.  We also uncover sizeable threshold barriers in our data set and link the analysis to the Lucas Paradox"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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