FDI in Space Revisited: The Role of Spillovers on Foreign Direct Investment within the European Union

Abstract

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What drives interdependence of FDI among host countries? The role of geographic proximity and similarity in public debt

“…Similarly, a sudden fall in FDI in one country is correlated with a reduction in FDI in contiguous countries. This highlights the interdependence of FDI flows within Europe and confirms previous findings in the literature, e.g., Blonigen et al (2007), Leibrecht and Riedl (2014) and Alamá-Sabater et al (2016). It is also an indication of the public good nature of FDI in the European Union: policies which attract FDI to a particular EU member country lead to a positive spillover in adjacent countries.…”

“…A second strand of the literature models the interdependence of FDI between host countries using spatial econometrics. Examples are Baltagi et al (2007), Blonigen et al (2007), Baltagi et al (2008), Chou et al (2011), Blanco (2012), Leibrecht andRiedl (2014), andAlamá-Sabater et al (2016). In these studies, interdependence between FDI host countries arises due to geographic proximity.…”

On the drivers of UK direct investment in the Spanish regions: A spatial Durbin approach

“…From an empirical point of view, some recent papers address the issue of spatial linkages when it comes to making decisions on FDI location. Using spatial econometric techniques, most of them pay attention to spillovers and/or linkages between countries, namely Blonigen, Davies, Waddell, and Naughton (2007), Baltagi et al (2007), Garretsen and Peeters (2009), Poelhekke and van der Ploeg (2009), Martínez‐Martín (2011), Nwaogu and Ryan (2014), Regelink and Elhorst (2015), Badinger and Egger (2016), Alamá‐Sabater, Heid, Jiménez‐Fernández, and Márquez‐Ramos (2017), Siddiqui and Iqbal (2018), and Gutiérrez‐Portilla, Maza, and Villaverde (2019a). Between these papers, Blonigen et al's stand out as one of the most relevant.…”

Has the crisis affected Spanish investment strategy abroad? A spatial panel data approach

“…It incorporates interdependencies across origin and destination countries in the analysis of FDI determinants. Alamá‐Sabater, Heid, Jiménez‐Fernández, and Márquez‐Ramos (2016a) and Leibrecht and Riedl () include the possibility that FDI from every origin country to any destination country depends on the volume of FDI flowing from an origin country’s neighbours to the same destination country, and the volume of FDI flowing from the same origin country to a particular destination country’s neighbours. Needless to say, this approach is not applicable to our case study.…”