Fixed Costs, Foreign Direct Investment, and Gravity with Zeros
26 p. Fixed costs play a crucial role in current models of foreign direct investment (FDI), yet they are almost entirely ignored in empirical treatments of FDI. We fill this gap by using a 1989-2001 panel of FDI flows into Iceland to examine the determinants of fixed costs for multinational firms an...
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University of Oregon, Dept of Economics
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ftunivoregonsb:oai:scholarsbank.uoregon.edu:1794/3880 2023-05-15T16:49:27+02:00 Fixed Costs, Foreign Direct Investment, and Gravity with Zeros Davies, Ronald B. Kristjánsdóttir, Helga 2006-06 137492 bytes application/pdf http://hdl.handle.net/1794/3880 en_US eng University of Oregon, Dept of Economics University of Oregon Economics Department Working Papers 2006-17 http://hdl.handle.net/1794/3880 Foreign direct investment Multinational enterprises Fixed costs Working Paper 2006 ftunivoregonsb 2022-12-19T13:54:27Z 26 p. Fixed costs play a crucial role in current models of foreign direct investment (FDI), yet they are almost entirely ignored in empirical treatments of FDI. We fill this gap by using a 1989-2001 panel of FDI flows into Iceland to examine the determinants of fixed costs for multinational firms and how these influence aggregate patterns of investment. Our additions to research in the field include usage of several natural resource variables, and the analysis of data on initial entry of FDI into a developed country. We use Heckman two step procedure, which allows us to account for fixed costs and their impact on estimation. Taken together, we find that the standard OLS approach to the data incorrectly links the quantity of FDI to source country variables while in fact most of their role is in determining whether FDI takes place at all. Report Iceland University of Oregon Scholars' Bank |
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University of Oregon Scholars' Bank |
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ftunivoregonsb |
language |
English |
topic |
Foreign direct investment Multinational enterprises Fixed costs |
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Foreign direct investment Multinational enterprises Fixed costs Davies, Ronald B. Kristjánsdóttir, Helga Fixed Costs, Foreign Direct Investment, and Gravity with Zeros |
topic_facet |
Foreign direct investment Multinational enterprises Fixed costs |
description |
26 p. Fixed costs play a crucial role in current models of foreign direct investment (FDI), yet they are almost entirely ignored in empirical treatments of FDI. We fill this gap by using a 1989-2001 panel of FDI flows into Iceland to examine the determinants of fixed costs for multinational firms and how these influence aggregate patterns of investment. Our additions to research in the field include usage of several natural resource variables, and the analysis of data on initial entry of FDI into a developed country. We use Heckman two step procedure, which allows us to account for fixed costs and their impact on estimation. Taken together, we find that the standard OLS approach to the data incorrectly links the quantity of FDI to source country variables while in fact most of their role is in determining whether FDI takes place at all. |
format |
Report |
author |
Davies, Ronald B. Kristjánsdóttir, Helga |
author_facet |
Davies, Ronald B. Kristjánsdóttir, Helga |
author_sort |
Davies, Ronald B. |
title |
Fixed Costs, Foreign Direct Investment, and Gravity with Zeros |
title_short |
Fixed Costs, Foreign Direct Investment, and Gravity with Zeros |
title_full |
Fixed Costs, Foreign Direct Investment, and Gravity with Zeros |
title_fullStr |
Fixed Costs, Foreign Direct Investment, and Gravity with Zeros |
title_full_unstemmed |
Fixed Costs, Foreign Direct Investment, and Gravity with Zeros |
title_sort |
fixed costs, foreign direct investment, and gravity with zeros |
publisher |
University of Oregon, Dept of Economics |
publishDate |
2006 |
url |
http://hdl.handle.net/1794/3880 |
genre |
Iceland |
genre_facet |
Iceland |
op_relation |
University of Oregon Economics Department Working Papers 2006-17 http://hdl.handle.net/1794/3880 |
_version_ |
1766039586281095168 |