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FDI study by Magdolna Sass and Imre Fertő in Applied Economics Letters

Volume 27, Issue 13, 28 July 2020, Pages 1067-1070 /Published online: 05 Sep 2019/

FDI according to ultimate versus immediate investor countries:
which dataset performs better?

Foreign direct investment (FDI) plays an ever-increasing role in the world economy; however, empirical research on many aspects of FDI is hindered by data problems. New data on FDI stocks, broken down according to the nationality of the ultimate owner company, are available for a few countries. Based on the example of three Central and Eastern European countries, we show that these new data give better results when analysing the main drivers of bilateral FDI, than the up till now available FDI data, which were broken down according to the nationality of the immediate investor firm. Furthermore, we present evidence on the main drivers of FDI into three former transition economies: distance, relative country size and trade costs.