The negative effect of regulatory divergence on foreign direct investment [E-Book] / Jean-Marc Fournier
The determinants of foreign direct investment (FDI) are explored with gravity models, using a Poisson estimator and a linear estimator, both with fixed effects. The heterogeneity of product market regulations has a large and robust impact on cross-border investment: a reduction of regulatory diverge...
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Full text |
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Personal Name(s): | Fournier, Jean-Marc. |
Imprint: |
Paris :
OECD Publishing,
2015
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Physical Description: |
36 p. ; 21 x 29.7cm. |
Note: |
englisch |
DOI: |
10.1787/5jrqgvg0dw27-en |
Series Title: |
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OECD Economics Department Working Papers ;
1268 |
Keywords: |
Economics |
The determinants of foreign direct investment (FDI) are explored with gravity models, using a Poisson estimator and a linear estimator, both with fixed effects. The heterogeneity of product market regulations has a large and robust impact on cross-border investment: a reduction of regulatory divergence by one fifth could increase FDI by about 15%. In particular, the divergence of command and control regulations and of protection of incumbents (antitrust exemptions, entry barriers in networks and services) reduce cross-border investment. In addition, countries with higher employment protection have both less inward and less outward FDI, and there is some evidence that more complex regulatory procedures reduce inward FDI. |