6533b7d4fe1ef96bd1261d93

RESEARCH PRODUCT

Quantile regression for the FDI gravity equation

Juan SapenaErik Alencar De FigueiredoJordi Paniagua

subject

MarketingFinancial economicsEconomicsEconometricsDifferential (mechanical device)Gravity equationForeign direct investmentPanel dataQuantile regressionQuantile

description

Abstract Firm-level heterogeneity shapes foreign direct investment (FDI) flows, whereby a few firms are responsible for most of the world's FDI. Aggregate outcomes of FDI are highly skewed, and the estimates of FDI's antecedents vary largely depending on FDI level. The incidence of individual firms, however, varies across FDI's quantiles. To study the individual firms' effect on FDI flows, this study develops a quantile regression method for bilateral FDI panel data. This study estimates the differential incidence of individual firm-level projects on aggregate flows among 161 countries from 2003 to 2012. Results suggest that FDI's determinants vary across quantiles. In particular, the effect of individual projects on FDI flows increases in the upper quantiles. Policymakers may use this insight to target polices on the few to benefit the many.

yearjournalcountryeditionlanguage
2015-07-01Journal of Business Research
https://doi.org/10.1016/j.jbusres.2015.01.043