The Geography of International Investment
Much foreign direct investment is between high-income countries, but investment in some developing and transition regions, while still modest, grew rapidly in the 1990s. Adjusting for market size, much investment stays close to home; adjusting for...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2000/05/693310/geography-international-investment http://hdl.handle.net/10986/18843 |
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okr-10986-18843 |
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oai_dc |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
| language |
English en_US |
| topic |
BORDER MERGERS CAPITAL EXPENDITURES CLASSICAL TRADE THEORY COMMODITY TRADE COMPETITIVE POSITION CONSTANT RETURNS TO SCALE COST SAVINGS DEVELOPED COUNTRIES DIFFERENTIATED PRODUCTS ECONOMIC ACTIVITY ECONOMIC ANALYSIS ECONOMIC EXCHANGE ECONOMIC GEOGRAPHY ECONOMIC INTEGRATION ECONOMIC SIZE ECONOMIES OF SCALE ELASTICITY ELECTRONICS INDUSTRY EMPIRICAL STUDIES EQUILIBRIUM EXPENDITURES EXPORTERS EXPORTS EXTERNALITIES FACTOR ENDOWMENTS FACTOR PRICE FACTORS OF PRODUCTION FDI FINAL GOODS FIXED COSTS FOREIGN AFFILIATES FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FOREIGN INVESTORS FOREIGN MARKET FOREIGN MARKETS FREE TRADE FREE TRADE AREA FREE TRADE IN GOODS GDP GROSS OUTPUT HOST COUNTRIES HOST COUNTRY HOST ECONOMIES IMPORTS INCOME INCOME COUNTRIES INCREASING RETURNS INCREASING RETURNS TO SCALE INDUSTRIAL COUNTRIES INDUSTRIAL ECONOMIES INDUSTRIALIZATION INPUT PRICES INTERMEDIATE GOODS INTERNATIONAL INVESTMENT INTERNATIONAL PRODUCTION INVESTMENT ACTIVITY INVESTMENT DECISIONS INVESTMENT FLOWS KNOWLEDGE SPILLOVERS LEGAL FRAMEWORK LOCAL FIRMS LOCAL MARKET LOCAL MARKETS LOCAL PRODUCTION LOW TRADE LOW TRADE BARRIERS MARGINAL COST MARGINAL COSTS MARKET ACCESS MARKET ENTRY MARKET SIZE MARKET STRUCTURE MERGERS MULTINATIONAL CORPORATIONS MULTINATIONAL FIRMS PATTERN OF TRADE PRICE DIFFERENCES PRODUCERS PRODUCTION ACTIVITIES PRODUCTION COSTS PRODUCTION NETWORKS PRODUCTION PROCESS QUANTITATIVE RESTRICTIONS RETAINED EARNINGS SAVINGS SCALE ECONOMIES TAX RATES TAX SYSTEMS TIME SERIES TRADE BARRIERS TRADE CREATING TRADE DATA TRADE FLOWS TRADE OPENNESS TRADE THEORY TRADE VOLUMES TRANSITION COUNTRIES TRANSITION ECONOMIES TRANSPORT COSTS TRANSPORT EQUIPMENT VARIABLE COSTS WAGES |
| spellingShingle |
BORDER MERGERS CAPITAL EXPENDITURES CLASSICAL TRADE THEORY COMMODITY TRADE COMPETITIVE POSITION CONSTANT RETURNS TO SCALE COST SAVINGS DEVELOPED COUNTRIES DIFFERENTIATED PRODUCTS ECONOMIC ACTIVITY ECONOMIC ANALYSIS ECONOMIC EXCHANGE ECONOMIC GEOGRAPHY ECONOMIC INTEGRATION ECONOMIC SIZE ECONOMIES OF SCALE ELASTICITY ELECTRONICS INDUSTRY EMPIRICAL STUDIES EQUILIBRIUM EXPENDITURES EXPORTERS EXPORTS EXTERNALITIES FACTOR ENDOWMENTS FACTOR PRICE FACTORS OF PRODUCTION FDI FINAL GOODS FIXED COSTS FOREIGN AFFILIATES FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FOREIGN INVESTORS FOREIGN MARKET FOREIGN MARKETS FREE TRADE FREE TRADE AREA FREE TRADE IN GOODS GDP GROSS OUTPUT HOST COUNTRIES HOST COUNTRY HOST ECONOMIES IMPORTS INCOME INCOME COUNTRIES INCREASING RETURNS INCREASING RETURNS TO SCALE INDUSTRIAL COUNTRIES INDUSTRIAL ECONOMIES INDUSTRIALIZATION INPUT PRICES INTERMEDIATE GOODS INTERNATIONAL INVESTMENT INTERNATIONAL PRODUCTION INVESTMENT ACTIVITY INVESTMENT DECISIONS INVESTMENT FLOWS KNOWLEDGE SPILLOVERS LEGAL FRAMEWORK LOCAL FIRMS LOCAL MARKET LOCAL MARKETS LOCAL PRODUCTION LOW TRADE LOW TRADE BARRIERS MARGINAL COST MARGINAL COSTS MARKET ACCESS MARKET ENTRY MARKET SIZE MARKET STRUCTURE MERGERS MULTINATIONAL CORPORATIONS MULTINATIONAL FIRMS PATTERN OF TRADE PRICE DIFFERENCES PRODUCERS PRODUCTION ACTIVITIES PRODUCTION COSTS PRODUCTION NETWORKS PRODUCTION PROCESS QUANTITATIVE RESTRICTIONS RETAINED EARNINGS SAVINGS SCALE ECONOMIES TAX RATES TAX SYSTEMS TIME SERIES TRADE BARRIERS TRADE CREATING TRADE DATA TRADE FLOWS TRADE OPENNESS TRADE THEORY TRADE VOLUMES TRANSITION COUNTRIES TRANSITION ECONOMIES TRANSPORT COSTS TRANSPORT EQUIPMENT VARIABLE COSTS WAGES Shatz, Howard J. Venables, Anthony J. The Geography of International Investment |
| relation |
Policy Research Working Paper;No. 2338 |
| description |
Much foreign direct investment is
between high-income countries, but investment in some
developing and transition regions, while still modest, grew
rapidly in the 1990s. Adjusting for market size, much
investment stays close to home; adjusting for distance, much
heads toward the countries with the biggest markets. Foreign
direct investment is more geographically concentrated than
either exports, or production. Thus, U.S. affiliate
production in Europe, is 7 times US exports to Europe; that
ratio drops to 4 for all industrial countries, and to 1.6
for developing countries. Multinational activity in
high-income countries is overwhelmingly horizontal,
involving production for sale to the host country market. In
developing countries, a greater proportion of multinational
activity is "vertical", involving manufacturing at
intermediate stages of production. Thus, only four percent
of US affiliate production in the European Union (EU) is
sold back to the United States, whereas for developing
countries, the figure is eighteen percent, rising to forty
percent for Mexico. Similarly, less than ten percent of
Japan's affiliate production in the EU is sold back to
Japan, compared with more than twenty percent in developing
countries. In models of horizontal activity, the decision to
go multinational, is a tradeoff between the additional fixed
costs involved in setting up a new plant, and the savings in
variable costs (transport costs, and tariffs) on exports. In
models of vertical activity, direct investment is motivated
by differences in factor prices) and discourage it (by
making trade between headquarters , and an affiliate more
expensive). The major outward investors carry out much
horizontal investment in large markets. For US investors,
this means Europe, especially the United Kingdom; for Japan
and Europe, it means the United States. Most EU investments,
however, stay within the EU. The major outward investors
carry out much of their vertical investment closer to home:
the United States, in Mexico; the EU, in Central and Eastern
Europe; Japan, in Asia. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Shatz, Howard J. Venables, Anthony J. |
| author_facet |
Shatz, Howard J. Venables, Anthony J. |
| author_sort |
Shatz, Howard J. |
| title |
The Geography of International Investment |
| title_short |
The Geography of International Investment |
| title_full |
The Geography of International Investment |
| title_fullStr |
The Geography of International Investment |
| title_full_unstemmed |
The Geography of International Investment |
| title_sort |
geography of international investment |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2000/05/693310/geography-international-investment http://hdl.handle.net/10986/18843 |
| _version_ |
1764441604270063616 |
| spelling |
okr-10986-188432021-04-23T14:03:46Z The Geography of International Investment Shatz, Howard J. Venables, Anthony J. BORDER MERGERS CAPITAL EXPENDITURES CLASSICAL TRADE THEORY COMMODITY TRADE COMPETITIVE POSITION CONSTANT RETURNS TO SCALE COST SAVINGS DEVELOPED COUNTRIES DIFFERENTIATED PRODUCTS ECONOMIC ACTIVITY ECONOMIC ANALYSIS ECONOMIC EXCHANGE ECONOMIC GEOGRAPHY ECONOMIC INTEGRATION ECONOMIC SIZE ECONOMIES OF SCALE ELASTICITY ELECTRONICS INDUSTRY EMPIRICAL STUDIES EQUILIBRIUM EXPENDITURES EXPORTERS EXPORTS EXTERNALITIES FACTOR ENDOWMENTS FACTOR PRICE FACTORS OF PRODUCTION FDI FINAL GOODS FIXED COSTS FOREIGN AFFILIATES FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FOREIGN INVESTORS FOREIGN MARKET FOREIGN MARKETS FREE TRADE FREE TRADE AREA FREE TRADE IN GOODS GDP GROSS OUTPUT HOST COUNTRIES HOST COUNTRY HOST ECONOMIES IMPORTS INCOME INCOME COUNTRIES INCREASING RETURNS INCREASING RETURNS TO SCALE INDUSTRIAL COUNTRIES INDUSTRIAL ECONOMIES INDUSTRIALIZATION INPUT PRICES INTERMEDIATE GOODS INTERNATIONAL INVESTMENT INTERNATIONAL PRODUCTION INVESTMENT ACTIVITY INVESTMENT DECISIONS INVESTMENT FLOWS KNOWLEDGE SPILLOVERS LEGAL FRAMEWORK LOCAL FIRMS LOCAL MARKET LOCAL MARKETS LOCAL PRODUCTION LOW TRADE LOW TRADE BARRIERS MARGINAL COST MARGINAL COSTS MARKET ACCESS MARKET ENTRY MARKET SIZE MARKET STRUCTURE MERGERS MULTINATIONAL CORPORATIONS MULTINATIONAL FIRMS PATTERN OF TRADE PRICE DIFFERENCES PRODUCERS PRODUCTION ACTIVITIES PRODUCTION COSTS PRODUCTION NETWORKS PRODUCTION PROCESS QUANTITATIVE RESTRICTIONS RETAINED EARNINGS SAVINGS SCALE ECONOMIES TAX RATES TAX SYSTEMS TIME SERIES TRADE BARRIERS TRADE CREATING TRADE DATA TRADE FLOWS TRADE OPENNESS TRADE THEORY TRADE VOLUMES TRANSITION COUNTRIES TRANSITION ECONOMIES TRANSPORT COSTS TRANSPORT EQUIPMENT VARIABLE COSTS WAGES Much foreign direct investment is between high-income countries, but investment in some developing and transition regions, while still modest, grew rapidly in the 1990s. Adjusting for market size, much investment stays close to home; adjusting for distance, much heads toward the countries with the biggest markets. Foreign direct investment is more geographically concentrated than either exports, or production. Thus, U.S. affiliate production in Europe, is 7 times US exports to Europe; that ratio drops to 4 for all industrial countries, and to 1.6 for developing countries. Multinational activity in high-income countries is overwhelmingly horizontal, involving production for sale to the host country market. In developing countries, a greater proportion of multinational activity is "vertical", involving manufacturing at intermediate stages of production. Thus, only four percent of US affiliate production in the European Union (EU) is sold back to the United States, whereas for developing countries, the figure is eighteen percent, rising to forty percent for Mexico. Similarly, less than ten percent of Japan's affiliate production in the EU is sold back to Japan, compared with more than twenty percent in developing countries. In models of horizontal activity, the decision to go multinational, is a tradeoff between the additional fixed costs involved in setting up a new plant, and the savings in variable costs (transport costs, and tariffs) on exports. In models of vertical activity, direct investment is motivated by differences in factor prices) and discourage it (by making trade between headquarters , and an affiliate more expensive). The major outward investors carry out much horizontal investment in large markets. For US investors, this means Europe, especially the United Kingdom; for Japan and Europe, it means the United States. Most EU investments, however, stay within the EU. The major outward investors carry out much of their vertical investment closer to home: the United States, in Mexico; the EU, in Central and Eastern Europe; Japan, in Asia. 2014-06-30T18:49:05Z 2014-06-30T18:49:05Z 2000-05 http://documents.worldbank.org/curated/en/2000/05/693310/geography-international-investment http://hdl.handle.net/10986/18843 English en_US Policy Research Working Paper;No. 2338 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |