Hisarciklilar, Mehtap and Kayam, Saime Suna and Kayalica, Ozgur (2006): Locational Drivers of FDI in MENA Countries: A Spatial Attempt.
Download (500Kb) | Preview
This study aims to analyze the locational drivers of FDI, with an emphasis on the role of market potential in MENA countries. Considering that the market does not necessarily comprise of the host economy but also trade opportunities in the region and in the rest of the world, this study distinguishes the country-specific, regional and trade-related market potential of the host MENA country in attracting FDI. It also examines the neighboring effects in locational choice. Using a panel of 18 countries covering the 1980-2001 time period, the model is estimated by Maximum Likelihood estimation method incorporating the possible spatial autocorrelation in the disturbances. The results imply that FDI in the MENA region is market oriented; as well as aiming at the domesic market in the host economy, it also utilises trade opportunities within the region.
|Item Type:||MPRA Paper|
|Institution:||Istanbul Technical University Faculty of Management|
|Original Title:||Locational Drivers of FDI in MENA Countries: A Spatial Attempt|
|Keywords:||Foreign Direct Investment; market potential; MENA region; spatial econometrics|
|Subjects:||R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity
F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business
F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment; Long-Term Capital Movements
C - Mathematical and Quantitative Methods > C2 - Single Equation Models; Single Variables > C23 - Models with Panel Data; Longitudinal Data; Spatial Time Series
|Depositing User:||Saime Kayam|
|Date Deposited:||09. Mar 2007|
|Last Modified:||19. Feb 2013 04:55|
Altomonte C. 2002. Transition Bursts: Market Potential and the Location Choices of Multinational Enterprises. 29th EARIE Annual Conference of the European Association for Research in Industrial Economics, 5-8 September, Madrid. Arellano M. and Bond S. 1991. Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies, 58: 277-297. Baltagi B.H., Egger P. and Pfaffermayr M. 2005. Estimating Models of Complex FDI: Are There Third-Country Effects? Spatial Econometrics Workshop, 8-9 April, Kiel, Germany. Bashir A.M. and Hassan M.K. 2002. Financial Development and Economic Growth in the Middle East, University of New Orleans Working Paper. Batra G., Kaufmann D. and Stone A. 2000. The Investment Climate Around the World: Voices of Firms from the World Business Environment Survey. Technical Report. Washington, DC: The World Bank. Blonigen B.A., Davies R.B., Waddell G.R. and Naughton H.T. 2004. FDI in Space: Spatial Autoregressive Relationships in Foreign Direct Investment. NBER Working Paper No. 10939, December. Brenton P. F. Di Mauro and Lucke M. 1999. Economic Integration and FDI: An Empirical Analysis of Foreign Investment in the EU and in Central and Eastern Europe. Empirica, 26 (2): 95–121. Buch C. M., Kokta R. M. and Piazolo D. 2003. Foreign direct investment in Europe: Is there redirection from the South to the East? Journal of Comparative Economics, 31(1): 94-109. Carstensen K. and Toubal F. 2004. Foreign Direct Investment in Central and Eastern European Countries: A Dynamic Panel Analysis. Journal of Comparative Economics, 32: 3-22. Chan K. K. and Gemayel E. R. 2003. Macroeconomic Instability and the Pattern of FDI In the MENA Region. Paper presented in 10th Economic Research Forum Conference, December, Cairo. Cieslik A. and Michael R. 2004. Explaining Japanese direct investment flows into an enlarged Europe: A comparison of gravity and economic potential approaches. Journal of the Japanese and International Economies, 18(1): 12-37. Coughlin C.C. and Segev E. 1999. Foreign Direct Investment in China: A Spatial Econometric Study. Working Papers 99-001b, Federal Reserve Bank of St. Louis. Crozet M., Mayer T. and Mucchielli J.-L. 2004. How do Firms Agglomerate? A Study of FDI in France. Regional Science and Urban Economics, 34(1): 27-54. Eid F. and Paua F. 2003. Foreign Direct Investment in the Arab World: The Changing Investment Landscape. World Economic Forum, Arab Competitiveness Report 2002-2003: 108-119. Hanson G. H. 1998. Market Potential, Increasing Returns, and Geographic Concentration, NBER Working Paper No. 6429. Harris C.D. 1954. The Market as a Factor in the Localization of Industry in the United States. Annals of the Association of American Geographers, 44: 315-348. Head K. and Mayer T. 2004. Market Potential and the Location of Japanese Investment in the European Union. Review of Economics and Statistics, 86: 959-972. IMF. 2001. World Economic Outlook, Washington: International Monetary Fund. Kamaly A. 2002. Evaluation of FDI flows into the MENA region. 9th Annual Conference of ERF, Sharjah. Koike R. 2004. Japan’s Foreign Direct Investment and Structural Change in Japan and East Asia Trade. IMES Discussion Papers, 2004-E-9. Krugman P. 1992. A Dynamic Spatial Model, NBER Working Paper No. 4219. Makdisi, S., Fattah Z. and Liman I. 2003. Determinants of Growth in the MENA Countries. Arab Planning Institute Working Paper, No: 39 ref:0301. Onyeiwu S. 2003. Analysis of FDI flows to developing countries: Is the MENA region different? ERF 10th Annual Conference, December, Marrakesh, Morocco. Rivlin P. 2001. Economic Policy and Performance in the Arab World. London: Lynne Rienner. Sekkat, K. and Véganzonès-Varoudakis M. 2004. Trade and Foreign Exchange Liberalization, Investment Climate, and FDI in the MENA Countries. World Bank Working Paper No. 39. Soliman, M. 2003. Foreign Direct Investment and LDCs Exports: Evidence from the MENA Region. ERF 10th Annual Conference, December, Marrakesh, Morocco. UNCTAD, Foreign Direct Investment Database, www.stats.unctad.org. UNCTAD, Handbook of Statistics Online Database, www.stats.unctad.org. UNCTAD. 1998. World Investment Report, Trends and Determinants, Geneva: United Nations. UNCTAD. 2003. World Investment Report, FDI Policies for Development: National and International Perspectives, Geneva: United Nations. UNCTAD. 2004. World Investment Report, The Shift Towards Services, Geneva: United Nations. UNCTAD. 2005. World Investment Report, TNCs and the Internalization of R&D, Geneva: United Nations. World Bank, World Development Indicators, http://publications.worldbank.org/WDI/. World Bank. 2003. MENA Development Report: Trade, Investment, and Development in the Middle East and North Africa: Engaging with the World, Washington DC. World Bank. 2005. MENA Region: 2005 Economic Developments and Prospects, Washington DC.