The remainder of paper is as follows. Section 2 describes the data under consideration and provides descriptive statistics. Section 3 presents the empirical strategy to identify the impact of the intensity of robot use in HICs on greenfield FDI flows from HICs to LMICs. Section 4 concludes.

# **2. Data and Descriptive Statistics**

The relationship between new automation technologies and GVCs is analyzed by combining data on the use of industrial robots from the International Federation of Robotics with data on greenfield FDI flows from the fDi Markets Database.

# a) <u>Foreign direct investment</u>

The data on foreign direct investment are taken from the fDi Markets Database, which is compiled by the Financial Times Group. fDi Intelligence has been tracking and verifying bilateral crossborder “greenfield” investment projects since 2003. The resulting fDi Markets Database provides annual information on the number and value of investment projects until 2015. Unlike other investments, which can be sticky and slow to change in response to other factors, these greenfield FDI data represent announcements and are therefore forward-looking. The database also enables the identification of tasks within industries, as it provides a business activity marker – for example, within apparel manufacturing, it distinguishes between manufacturing per se and design/retail services etc.

The literature distinguishes four types of FDI: (a) natural resource–seeking investment (focused on exploiting natural resources); (b) market-seeking investment (serving large domestic or regional markets); (c) strategic asset-seeking investment (driven by investor interest in acquiring strategic assets through mergers and acquisitions); and (d) efficiency-seeking investment. Of interest here is the last type of investment, which is typically export-oriented; leverages local factors of production to reduce costs; and involves the transfer of production and managerial know-how, access to distribution networks, and sources of finance. Greenfield FDI, by definition, excludes strategic asset-seeking FDI through mergers and acquisitions. Further, because these data go beyond country aggregates and consider differences at the industry level, it enables the exclusion of natural resource–seeking FDI.

It is more difficult to distinguish between efficiency-seeking FDI and market-seeking FDI in the data, although differences across manufacturing industries can provide some indications. Take, for instance the classic GVC-intensive sectors that are characterized by a lead-firm network structure, and have been much studied – apparel, footwear and leather products, transportation equipment, and electronics (Sturgeon and Memedovic 2011). For apparel and leather products, China and Eastern European countries such as Bulgaria, Hungary, and Romania experienced a decline in the number of greenfield FDI projects in 2011–15 compared with 2003–07, while Ethiopia, Indonesia, Serbia, Myanmar and Vietnam experienced an increase (Hallward-Driemeier and Nayyar 2017). This suggests that FDI may have migrated from China to LMICs in Asia and Africa and from higher- to lower-wage locations in the Europe and Central Asia region. In the transportation equipment subsector, China, and countries in Europe and Central Asia experienced a decline in the number of greenfield FDI projects during 2011–15 relative to 2003–07, but certain large emerging economies such as Brazil, India, Mexico, and Thailand experienced an increase over the 5