Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/269885 
Authors: 
Year of Publication: 
2010
Publisher: 
University of Oxford, Oxford
Abstract: 
FDI is an important source of capital, technology, and skills transfer for both developing and developed economies, this paper explores the effects of three determinants of bilateral FDI, including natural barriers, the “at-the-border” barrier (regional trade agreement), and the “behind-the-border” barrier (domestic regulatory environment). An augmented gravity model is deployed to carry out the test for the inter-OECD and intra-OECD regions in 60 economies for the period 1985 – 2006. The main aim is to study the roles of external institutions vis-à-vis domestic institutions on FDI. We perform several estimation strategies for our panel data analysis, finding geographical, historical, and cultural proximities all explain bilateral FDI significantly, even after controlling for unobserved country-pair heterogeneity and time effect. Using a “catch-all” regulatory environment index and a dummy variable for country-pair membership of RTA, our analysis shows that lax regulatory environment and RTA are seemingly associated with FDI positively in both regions.
Subjects: 
Economic Development
Institutions
Policy
Economic Growth
FDI
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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