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 in other economies. Using bilateral data from 1990-2003 and drawing from the knowledge-capital model of the multinational enterprises to control for fundam...

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Main Authors: Cravino, Javier, Lederman, Daniel, Olarreaga, Marcelo
Format: Policy Research Working Paper
Language:English
Published: World Bank, Washington, DC 2012
Subjects:
FDI
GDP
R&D
TAX
WEB
WTO
Online Access:http://documents.worldbank.org/curated/en/2007/09/8339154/substitution-between-foreign-capital-china-india-rest-world-latin-america-much-ado-nothing-substitution-between-foreign-capital-china-india-rest-world-latin-america-much-ado-nothing
http://hdl.handle.net/10986/7338
id okr-10986-7338
recordtype oai_dc
spelling okr-10986-73382021-04-23T14:02:34Z 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 ABSOLUTE VALUE ACCOUNTING AGRICULTURE BENCHMARK BENCHMARK SPECIFICATION BILATERAL TRADE BILATERAL TRADE DATA CAPITAL STOCKS CENTRAL AMERICA CENTRAL AMERICAN CONSUMER PRICE INDEX CONTROL VARIABLES CURRENCY DEPENDENT VARIABLE DEVELOPING COUNTRIES DEVELOPMENT BANK ECONOMETRIC ANALYSES ECONOMETRIC MODELS ECONOMIC GROWTH EMERGING ECONOMIES EXCHANGE RATE EXPECTED VALUE EXPLANATORY VARIABLES EXPORTS FDI FEDERAL RESERVE FEDERAL RESERVE SYSTEM FINANCIAL SUPPORT FIXED EFFECT FIXED EFFECTS FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FOREIGN INVESTORS FUNDAMENTAL DETERMINANTS GDP GDP PER CAPITA GLOBAL BUSINESS GLOBAL ECONOMY GRAVITY MODEL GROWTH RATE HOST COUNTRIES HOST COUNTRY HOST ECONOMIES HOST-COUNTRY IMPORTS INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL FINANCE INTERNATIONAL FINANCIAL INTERNATIONAL FINANCIAL STATISTICS INTERNATIONAL INVESTMENT INTERNATIONAL TRADE INVESTING INVESTMENT FLOWS LABOR FORCE LATIN AMERICAN MACROECONOMIC VOLATILITY MANUFACTURING MANUFACTURING INDUSTRIES MANUFACTURING SECTOR MARKET EXCHANGE RATE MARKET SIZE MARKETING MONETARY FUND MULTINATIONAL ENTERPRISE MULTINATIONAL ENTERPRISES NATIONAL CURRENCY NATURAL RESOURCE NATURAL RESOURCES NET EXPORTS PATENTS POLITICAL INSTABILITY POLITICAL RISK POLITICAL STABILITY POSITIVE COEFFICIENT POSITIVE EFFECTS PRODUCTION PROCESSES PUBLIC FINANCE R&D REAL EXCHANGE RATE REAL GDP RESULT RESULTS ROBUSTNESS CHECK SEARCH SLOWDOWN STANDARD DEVIATION SUBSTITUTION EFFECT TAX TOTAL MARKET TRADE REFORMS TREATIES TRINIDAD AND TOBAGO VALUE ADDED VERTICAL INTEGRATION WAGES WEB WORLD DEVELOPMENT INDICATORS WTO This paper explores the impact of the emergence of China and India on foreign capital stocks in other economies. Using bilateral data from 1990-2003 and drawing from the knowledge-capital model of the multinational enterprises to control for fundamental determinants of foreign capital stocks across countries, the evidence suggests that the impact of foreign capital in China and India on other countries' foreign capital stocks has been positive. This finding is robust to the use of ordinary least squares, Poisson, and negative binomial estimators; to the inclusion of time and country-pair fixed effects; to the inclusion of natural-resource endowments; and to the use of the sum of foreign capital stocks in Hong Kong (China) and mainland China instead of using only the latter's foreign capital stocks. There is surprisingly weak evidence of substitution in manufacturing foreign capital stocks away from Central America and Mexico in favor of China, and from the Southern Cone countries to India, but these findings are not robust to the use of alternative estimation techniques. 2012-06-06T20:54:03Z 2012-06-06T20:54:03Z 2007-09 http://documents.worldbank.org/curated/en/2007/09/8339154/substitution-between-foreign-capital-china-india-rest-world-latin-america-much-ado-nothing-substitution-between-foreign-capital-china-india-rest-world-latin-america-much-ado-nothing http://hdl.handle.net/10986/7338 English Policy Research Working Paper; No. 4361 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America China India
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic ABSOLUTE VALUE
ACCOUNTING
AGRICULTURE
BENCHMARK
BENCHMARK SPECIFICATION
BILATERAL TRADE
BILATERAL TRADE DATA
CAPITAL STOCKS
CENTRAL AMERICA
CENTRAL AMERICAN
CONSUMER PRICE INDEX
CONTROL VARIABLES
CURRENCY
DEPENDENT VARIABLE
DEVELOPING COUNTRIES
DEVELOPMENT BANK
ECONOMETRIC ANALYSES
ECONOMETRIC MODELS
ECONOMIC GROWTH
EMERGING ECONOMIES
EXCHANGE RATE
EXPECTED VALUE
EXPLANATORY VARIABLES
EXPORTS
FDI
FEDERAL RESERVE
FEDERAL RESERVE SYSTEM
FINANCIAL SUPPORT
FIXED EFFECT
FIXED EFFECTS
FOREIGN CAPITAL
FOREIGN DIRECT INVESTMENT
FOREIGN INVESTMENT
FOREIGN INVESTORS
FUNDAMENTAL DETERMINANTS
GDP
GDP PER CAPITA
GLOBAL BUSINESS
GLOBAL ECONOMY
GRAVITY MODEL
GROWTH RATE
HOST COUNTRIES
HOST COUNTRY
HOST ECONOMIES
HOST-COUNTRY
IMPORTS
INTERNATIONAL BANK
INTERNATIONAL ECONOMICS
INTERNATIONAL FINANCE
INTERNATIONAL FINANCIAL
INTERNATIONAL FINANCIAL STATISTICS
INTERNATIONAL INVESTMENT
INTERNATIONAL TRADE
INVESTING
INVESTMENT FLOWS
LABOR FORCE
LATIN AMERICAN
MACROECONOMIC VOLATILITY
MANUFACTURING
MANUFACTURING INDUSTRIES
MANUFACTURING SECTOR
MARKET EXCHANGE RATE
MARKET SIZE
MARKETING
MONETARY FUND
MULTINATIONAL ENTERPRISE
MULTINATIONAL ENTERPRISES
NATIONAL CURRENCY
NATURAL RESOURCE
NATURAL RESOURCES
NET EXPORTS
PATENTS
POLITICAL INSTABILITY
POLITICAL RISK
POLITICAL STABILITY
POSITIVE COEFFICIENT
POSITIVE EFFECTS
PRODUCTION PROCESSES
PUBLIC FINANCE
R&D
REAL EXCHANGE RATE
REAL GDP
RESULT
RESULTS
ROBUSTNESS CHECK
SEARCH
SLOWDOWN
STANDARD DEVIATION
SUBSTITUTION EFFECT
TAX
TOTAL MARKET
TRADE REFORMS
TREATIES
TRINIDAD AND TOBAGO
VALUE ADDED
VERTICAL INTEGRATION
WAGES
WEB
WORLD DEVELOPMENT INDICATORS
WTO
spellingShingle ABSOLUTE VALUE
ACCOUNTING
AGRICULTURE
BENCHMARK
BENCHMARK SPECIFICATION
BILATERAL TRADE
BILATERAL TRADE DATA
CAPITAL STOCKS
CENTRAL AMERICA
CENTRAL AMERICAN
CONSUMER PRICE INDEX
CONTROL VARIABLES
CURRENCY
DEPENDENT VARIABLE
DEVELOPING COUNTRIES
DEVELOPMENT BANK
ECONOMETRIC ANALYSES
ECONOMETRIC MODELS
ECONOMIC GROWTH
EMERGING ECONOMIES
EXCHANGE RATE
EXPECTED VALUE
EXPLANATORY VARIABLES
EXPORTS
FDI
FEDERAL RESERVE
FEDERAL RESERVE SYSTEM
FINANCIAL SUPPORT
FIXED EFFECT
FIXED EFFECTS
FOREIGN CAPITAL
FOREIGN DIRECT INVESTMENT
FOREIGN INVESTMENT
FOREIGN INVESTORS
FUNDAMENTAL DETERMINANTS
GDP
GDP PER CAPITA
GLOBAL BUSINESS
GLOBAL ECONOMY
GRAVITY MODEL
GROWTH RATE
HOST COUNTRIES
HOST COUNTRY
HOST ECONOMIES
HOST-COUNTRY
IMPORTS
INTERNATIONAL BANK
INTERNATIONAL ECONOMICS
INTERNATIONAL FINANCE
INTERNATIONAL FINANCIAL
INTERNATIONAL FINANCIAL STATISTICS
INTERNATIONAL INVESTMENT
INTERNATIONAL TRADE
INVESTING
INVESTMENT FLOWS
LABOR FORCE
LATIN AMERICAN
MACROECONOMIC VOLATILITY
MANUFACTURING
MANUFACTURING INDUSTRIES
MANUFACTURING SECTOR
MARKET EXCHANGE RATE
MARKET SIZE
MARKETING
MONETARY FUND
MULTINATIONAL ENTERPRISE
MULTINATIONAL ENTERPRISES
NATIONAL CURRENCY
NATURAL RESOURCE
NATURAL RESOURCES
NET EXPORTS
PATENTS
POLITICAL INSTABILITY
POLITICAL RISK
POLITICAL STABILITY
POSITIVE COEFFICIENT
POSITIVE EFFECTS
PRODUCTION PROCESSES
PUBLIC FINANCE
R&D
REAL EXCHANGE RATE
REAL GDP
RESULT
RESULTS
ROBUSTNESS CHECK
SEARCH
SLOWDOWN
STANDARD DEVIATION
SUBSTITUTION EFFECT
TAX
TOTAL MARKET
TRADE REFORMS
TREATIES
TRINIDAD AND TOBAGO
VALUE ADDED
VERTICAL INTEGRATION
WAGES
WEB
WORLD DEVELOPMENT INDICATORS
WTO
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 Latin America
China
India
relation Policy Research Working Paper; No. 4361
description This paper explores the impact of the emergence of China and India on foreign capital stocks in other economies. Using bilateral data from 1990-2003 and drawing from the knowledge-capital model of the multinational enterprises to control for fundamental determinants of foreign capital stocks across countries, the evidence suggests that the impact of foreign capital in China and India on other countries' foreign capital stocks has been positive. This finding is robust to the use of ordinary least squares, Poisson, and negative binomial estimators; to the inclusion of time and country-pair fixed effects; to the inclusion of natural-resource endowments; and to the use of the sum of foreign capital stocks in Hong Kong (China) and mainland China instead of using only the latter's foreign capital stocks. There is surprisingly weak evidence of substitution in manufacturing foreign capital stocks away from Central America and Mexico in favor of China, and from the Southern Cone countries to India, but these findings are not robust to the use of alternative estimation techniques.
format Publications & Research :: Policy Research Working Paper
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?
publisher World Bank, Washington, DC
publishDate 2012
url http://documents.worldbank.org/curated/en/2007/09/8339154/substitution-between-foreign-capital-china-india-rest-world-latin-america-much-ado-nothing-substitution-between-foreign-capital-china-india-rest-world-latin-america-much-ado-nothing
http://hdl.handle.net/10986/7338
_version_ 1764402356383907840