Substitution between Foreign Capital in China, India, the Rest of the World, and Latin America: Much Ado about Nothing?

This paper explores the impact of the emergence of China and India on Foreign Capital Stocks (FCS) in other economies. Using bilateral FCS data from 1990-2003 and drawing from the Knowledge-Capital Model of multinational enterprises to control for fundamental determinants of FCS across countries, th...

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Main Authors: Cravino, Javier, Lederman, Daniel, Olarreaga, Marcelo
Format: Journal Article
Language:EN
Published: 2012
Subjects:
Online Access:http://hdl.handle.net/10986/5551
id okr-10986-5551
recordtype oai_dc
spelling okr-10986-55512021-04-23T14:02:22Z Substitution between Foreign Capital in China, India, the Rest of the World, and Latin America: Much Ado about Nothing? Cravino, Javier Lederman, Daniel Olarreaga, Marcelo Multinational Firms International Business F230 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 International Linkages to Development Role of International Organizations O190 Socialist Systems and Transitional Economies: Factor and Product Markets Industry Studies Population P230 Socialist Institutions and Their Transitions: International Trade, Finance, Investment, and Aid P330 Socialist Institutions and Their Transitions: Financial Economics P340 This paper explores the impact of the emergence of China and India on Foreign Capital Stocks (FCS) in other economies. Using bilateral FCS data from 1990-2003 and drawing from the Knowledge-Capital Model of multinational enterprises to control for fundamental determinants of FCS across countries, the evidence suggests that the impact of foreign capital in China and India on other countries' FCS has been positive. This finding is robust across different specifications and estimation techniques. There is surprisingly weak evidence of substitution in manufacturing FCS away from Central America/Mexico in favor of China, and from Southern Cone countries to India, but these findings are not robust to the use of alternative estimation techniques. In sum, fears of a global competition for FDI seem misplaced, and policymakers concerned about attracting foreign investors should focus their efforts on the fundamentals determinants of FDI. 2012-03-30T07:33:22Z 2012-03-30T07:33:22Z 2008 Journal Article Journal of Economic Integration 1225651X http://hdl.handle.net/10986/5551 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article India China
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language EN
topic Multinational Firms
International Business F230
Economic Development: Financial Markets
Saving and Capital Investment
Corporate Finance and Governance O160
International Linkages to Development
Role of International Organizations O190
Socialist Systems and Transitional Economies: Factor and Product Markets
Industry Studies
Population P230
Socialist Institutions and Their Transitions: International Trade, Finance, Investment, and Aid P330
Socialist Institutions and Their Transitions: Financial Economics P340
spellingShingle Multinational Firms
International Business F230
Economic Development: Financial Markets
Saving and Capital Investment
Corporate Finance and Governance O160
International Linkages to Development
Role of International Organizations O190
Socialist Systems and Transitional Economies: Factor and Product Markets
Industry Studies
Population P230
Socialist Institutions and Their Transitions: International Trade, Finance, Investment, and Aid P330
Socialist Institutions and Their Transitions: Financial Economics P340
Cravino, Javier
Lederman, Daniel
Olarreaga, Marcelo
Substitution between Foreign Capital in China, India, the Rest of the World, and Latin America: Much Ado about Nothing?
geographic_facet India
China
relation http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description This paper explores the impact of the emergence of China and India on Foreign Capital Stocks (FCS) in other economies. Using bilateral FCS data from 1990-2003 and drawing from the Knowledge-Capital Model of multinational enterprises to control for fundamental determinants of FCS across countries, the evidence suggests that the impact of foreign capital in China and India on other countries' FCS has been positive. This finding is robust across different specifications and estimation techniques. There is surprisingly weak evidence of substitution in manufacturing FCS away from Central America/Mexico in favor of China, and from Southern Cone countries to India, but these findings are not robust to the use of alternative estimation techniques. In sum, fears of a global competition for FDI seem misplaced, and policymakers concerned about attracting foreign investors should focus their efforts on the fundamentals determinants of FDI.
format Journal Article
author Cravino, Javier
Lederman, Daniel
Olarreaga, Marcelo
author_facet Cravino, Javier
Lederman, Daniel
Olarreaga, Marcelo
author_sort Cravino, Javier
title Substitution between Foreign Capital in China, India, the Rest of the World, and Latin America: Much Ado about Nothing?
title_short Substitution between Foreign Capital in China, India, the Rest of the World, and Latin America: Much Ado about Nothing?
title_full Substitution between Foreign Capital in China, India, the Rest of the World, and Latin America: Much Ado about Nothing?
title_fullStr Substitution between Foreign Capital in China, India, the Rest of the World, and Latin America: Much Ado about Nothing?
title_full_unstemmed Substitution between Foreign Capital in China, India, the Rest of the World, and Latin America: Much Ado about Nothing?
title_sort substitution between foreign capital in china, india, the rest of the world, and latin america: much ado about nothing?
publishDate 2012
url http://hdl.handle.net/10986/5551
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