The Changing Nature of Foreign Direct Investment in Developing Countries

Evidence and Implications

in The Journal of World Investment & Trade
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The Changing Nature of Foreign Direct Investment in Developing Countries

Evidence and Implications

in The Journal of World Investment & Trade


  • A good discussion of the concepts ofhorizontal and vertical Fm is given by Markusen and Maskus (2001). 2 I'lant-level fixed costs are the additional tixed costs involved in setting up a new plant. They also include the costs of dealing with foreign administration, regulations and tax systems.

  • 3 Between 1990 and 2001, inward Frn stocks in telecommunications and power generation and distribution increased 9 times and 13 times, respectively, in developing countries (UNCTAD, 2003).

  • I For an in-depth discussion of these issues, see Mani and Wheeler (1997); OECD (1998); and Neurnayer (2001). ). Strong crowding-out has been the norm in Latin America (Agosin and Mayer, 2000). In the case of "natural monopolies", a State monopoly would be replaced by a private monopoly (Nunnenkamp, 2002).

  • In 1996, developing countries' share of world investment inflows rose to an all-time high of 37 percent (UNCTAD, 1997b).

  • H Nunnenkamp and Spatz (2002b) would appear to be the first researchers who have assessed changes in the relative importance of traditional Fm determinants over time. 9 For a discussion oftraditional determinants, refer to Section 11.13 of this article.

  • 1(1 Emerging market countries are in this context defined as including Argentina, Bolivia, Brazil, Bulgaria, Chile, China Mainland, Colombia, Costa Rica, Croatia, the Czech Republic, the Dominican Republic, Ecuador, Egypt, El Salvador, Hungary, India, Indonesia, Jordan, Malaysia, Mexico, Morocco, Panama, Pakistan, Paraguay, Peru, the Philippines, Poland, Romania, the Russian Federation, the Slovak Republic, South Africa, Thailand, Tunisia, Turkey, Ukraine, Uruguay, Venezuela and Viet Nam.

  • For a discussion of non-traditional determinants., refer to Section II.B of this article.

  • 12 Notably (osta Rica, the Dominican Republic, El Salvador, Honduras and Guatemala.

  • 13 According to the Oecd Development Assistance Cornrnittee (DAC), total official development assistance (ODA) from DAC Member countries (the "donor" community) to developing countries and multilateral organizations has declined from 0.33 percent of DAC Members' combined gross national income (GNI) in 1990-1992 to 0.30, 0.29, 0.26 and 0.25 percent of their combined GNI in subsequent years before reaching the low point of 0.22 percent in the period 1999-2001. However, it should be noted that Oun has slightly recovered to 0.23 and 0.25 percent in 2002 and 2003, respectively (figures for 2003 are still preliminary); see the OECD Development Assistance Committee Database.

  • �; In fact, the lack ofskillcd labour is one of the principal reasons why Li)(:s so far have been unable to attract efficiency-seeking FDI (Zhang and Markusen, 1999).

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