NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Which Countries Export FDI, and How Much?

Assaf Razin, Yona Rubinstein, Efraim Sadka

NBER Working Paper No. 10145
Issued in December 2003
NBER Program(s):   IFM   ITI

The paper provides a reconciliation of Lucas' paradox, based on fixed setup costs of new investments. With such costs, it does not pay a firm to make a small' investment, even though such an investment is called for by marginal productivity conditions. Using a sample of 45 developed and developing countries we estimate jointly the participation equation (the decision whether to invest at all) and the FDI flow equation (the decision how much to invest). We find that countries which are more likely to serve as source for FDI exports than their characteristics project export lower flow of FDI than is predicted by their characteristics. This negative correlation suggests that the source countries with relatively low setup costs are also those with high marginal productivity of capital.

download in pdf format
   (693 K)

email paper

This paper is available as PDF (693 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10145

Users who downloaded this paper also downloaded these:
Helpman, Melitz, and Yeaple w9439 Export versus FDI
Blonigen w11299 A Review of the Empirical Literature on FDI Determinants
Razin, Sadka, and Tong w11639 Bilateral FDI Flows: Threshold Barriers and Productivity Shocks
Lipsey w12808 Measuring the Impacts of FDI in Central and Eastern Europe
Lipsey w12996 Defining and Measuring the Location of FDI Output
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us