Seminar Papers, Institute for International Economic Studies, Stockholm University
Determinants of Capital Intensive and R&D Intensive Foreign Direct Investment
() and Jr., Jose Mauricio Prado
Abstract: We study the determinants of capital intensity and
technology content of foreign direct investment, an important economic
driving force for developing countries. For this purpose, we use sectoral
industry data on U.S. foreign investment abroad, and data on host
countries' institutional characteristics, like investment climate,
protection of property rights, labor standards and constitutional
arrangements. Our regressions show that better protection of property
rights has a significant positive effect on R&D but not on capital
intensive capital flows. There is evidence that an increase in workers'
bargaining power results in a reduction of capital and technologically
intensive foreign investment. And although the evidence with respect to
constitutional arrangements is not very strong, presidential regimes appear
to be less able than parliamentary ones to deliver policies attracting R&D
intensive capital flows. This is consistent with recent research on the
effects of constitutional arrangements on economic growth.
Keywords: FDI; (follow links to similar papers)
JEL-Codes: F21; (follow links to similar papers)
29 pages, August 6, 2007
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