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

Author/Editor:

Harm Zebregs

Publication Date:

September 1, 1998

Electronic Access:

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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.

Series:

Working Paper No. 1998/139

Subject:

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

English

Publication Date:

September 1, 1998

ISBN/ISSN:

9781451929607/1018-5941

Stock No:

WPIEA1391998

Pages:

28

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