Can the Neoclassical Model Explain the Distribution of Foreign Direct Investment Across Developing Countries?

September 1, 1998

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Format: Chicago

Harm Zebregs. Can the Neoclassical Model Explain the Distribution of Foreign Direct Investment Across Developing Countries?, (USA: International Monetary Fund, 1998) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Since the beginning of the 1990s, foreign direct investment (FDI) in developing countries has increased dramatically. The distribution of FDI flows across these countries, however, is highly uneven; only a small number attract comparatively large amounts of foreign capital. This paper investigates whether the pattern of FDI flows can be explained by the standard neoclassical model or by modified versions of this model that allow for differences in production technologies across countries. The results suggest that the standard neoclassical approach is not particularly useful if we want to understand FDI flows to developing countries.

Subject: Balance of payments, Capital flows, Capital productivity, Economic theory, Foreign direct investment, Neoclassical theory, Production, Technology

Keywords: Capital, Capital flows, Capital productivity, East Asia, FDI data, FDI flow, FDI-GNP ratio, Flows to developing countries, Foreign direct investment, Foreign Investment, GNP, Neoclassical Theory, Share parameter, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1998/139
Stock No:

WPIEA1391998
ISBN:

9781451929607
ISSN:

1018-5941

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