The Determinants of Bilateral FDI: Is Asia Different?

24 Pages Posted: 29 Mar 2010 Last revised: 1 Apr 2010

See all articles by Peter A. Petri

Peter A. Petri

Brandeis University - Brandeis International Business School; Brookings Institution; Brandeis University - Department of Economics

Date Written: March 24, 2010

Abstract

Intra-Asian foreign direct investment (FDI) is dominated by flows from high technology economies to medium technology economies, while FDI elsewhere primarily consists of flows among high technology economies. This distinctive pattern is not due simply to differences in the relative distribution of Asian FDI recipients by technology, or to systematic differences in Asia’s technology characteristics. A gravity model analysis is used to explore whether Asian FDI patterns differ significantly from those elsewhere, and if so, in what ways. The results show that Asian FDI flows, in contrast to other FDI flows, systematically favor hosts with relatively low technology achievement and relatively strong intellectual property rights regimes. This type of “Asian exceptionalism” is consistent with “flying geese” theories that have argued that Asian development is the result of technology flows among economies that occupy nearby rungs of the technology ladder.

Keywords: foreign direct investment, FDI, Asia, technology transfer, gravity model, intellectual property rights, flying geese

JEL Classification: F21, O33, O34

Suggested Citation

Petri, Peter A., The Determinants of Bilateral FDI: Is Asia Different? (March 24, 2010). Available at SSRN: https://ssrn.com/abstract=1577923 or http://dx.doi.org/10.2139/ssrn.1577923

Peter A. Petri (Contact Author)

Brandeis University - Brandeis International Business School ( email )

Mailstop 32
Waltham, MA 02454-9110
United States

HOME PAGE: http://ppetri.com/

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

Brandeis University - Department of Economics

Waltham, MA 02454-9110
United States

HOME PAGE: http://ppetri.com/

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