TY  - JOUR
AU  - Razin,Assaf
AU  - Rubinstein,Yona
AU  - Sadka,Efraim
TI  - Which Countries Export FDI, and How Much?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10145
PY  - 2003
Y2  - December 2003
UR  - http://www.nber.org/papers/w10145
L1  - http://www.nber.org/papers/w10145.pdf
N1  - Author contact info:
Assaf Razin
Department of Economics
Cornell University
Uris 422
Ithaca, NY 14853
Tel: 607/255-9625
Fax: 607/255-2818
E-Mail: ar256@cornell.edu

Yona Rubinstein
Brown University
Department of Economics
Box B
Providence, RI 02912
E-Mail: y.rubinstein@lse.ac.uk

Efraim Sadka
Tel Aviv University
Eitan Berglas School of Economics
P.O.B. 39040
Ramat Aviv, Tel Aviv, 69978, ISRAEL
E-Mail: sadka@post.tau.ac.il
AB  - 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.
ER  -