6533b85afe1ef96bd12b8dc5

RESEARCH PRODUCT

Understanding german fdi in latin america and asia: a comparison of glm estimators

Laura MontolioCecilio TamaritMariam Camarero

subject

Generalized linear modelLatin Americansfdi determinantsEconomics Econometrics and Finance (miscellaneous)gravity modelsNegative binomial distributionDeveloping countryForeign direct investmentDevelopmentgermany:CIENCIAS ECONÓMICAS [UNESCO]German0502 economics and businessddc:330EconometricsEconomicsC13050207 economicsC33050208 financelcsh:HB71-7405 social sciencesEstimatorlcsh:Economics as a scienceUNESCO::CIENCIAS ECONÓMICASgeneralized linear modelslanguage.human_languageGravity model of tradelanguageF21F23outward foreign direct investment

description

The growth of Foreign Direct Investment (FDI) in developing countries over the last decade has attracted an intense academic and policy-oriented interest for its determinants. Despite the gravity model being considered a useful tool to approximate bilateral FDI flows, the literature has seen a growing debate in relation to its econometric specification, so that which is the best estimator for the gravity equation is far from conclusive. This paper examines the determinants of German outward FDI in Latin America and Asia for the period 1996-2012 by evaluating the performance of alternative Generalized Linear Model (GLM) estimators. Our findings indicate that Negative Binomial Pseudo Maximum Likelihood (NBPML) is the estimator best matched to our data, followed by Gamma Pseudo Maximum Likelihood (GPML). Furthermore, German FDI in Latin America is found to be predominantly vertical in nature, whereas that in Asia is mainly market-seeking.

yearjournalcountryeditionlanguage
2020-03-10
10.3390/economies8010019https://hdl.handle.net/10550/82592