Pattern of Foreign Direct Investment in Emerging Economies: An Exploration

Murali Patibandla

    Research output: Working paperResearch

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    Abstract

    Until recently major part of FDI flows had been among developed economies with similar relative factor endowments, income levels and market institutions such as property rights regimes. Consequently, major theoretical streams of FDI in economics could simplify FDI as a substitute for intra-industry trade by incorporating transportation costs and economies of scale (multi-plants). In the recent years, developing economies have increased their share of FDI inflows significantly (40%). Explanation of magnitude and pattern of FDI into developing economies requires a complex ray of factors. This is because these economies differ significantly from developed economies and also among each other in economic development levels and endowment of market institutions. This paper attempts to develop a conceptual framework to explain pattern of FDI in developing economies by identifying the determinants on the supply and demand side and market institutional conditions. Differences in the endowment of the factors in a set determine the pattern of FDI in these economies. This paper illustrates this by taking the case study of China and India.
    Original languageEnglish
    Place of PublicationFrederiksberg
    PublisherDepartment of International Economics and Management, Copenhagen Business School
    Number of pages37
    Publication statusPublished - 2001
    SeriesWorking Paper / Department of International Economics and Management, Copenhagen Business School
    Number1-2001

    Keywords

    • Emerging economies
    • Pattern of FDI
    • China and India

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