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Austrian Outbound Foreign Direct Investment in Europe:A spatial econometric study

Author

Listed:
  • Manfred M. Fischer

    (Vienna University of Economics and Business, Austria)

  • Nico Pintar

    (Vienna University of Economics and Business, Austria)

  • Benedikt Sargant

    (Vienna University of Economics and Business, Austria)

Abstract

This paper focuses on Austrian outbound foreign direct investment (FDI, measured by sales of Austrian affiliates abroad) in Europe over the period 2009–2013, using a spatial Durbin panel data model specification with fixed effects, and a spatial weight matrix based on the first-order contiguity relationship of the countries and normalised by its largest eigenvalue. Third-country effects essentially enter the empirical analysis in two major ways: first, by the endogenous spatial lag on FDI (measured by FDI into markets nearby the host country), and, second, by including an exogenous market potential variable that measures the size of markets nearby the FDI host country in terms of gross domestic product. The question whether the empirical result is compatible with horizontal, vertical, export-platform or complex vertical FDI then depends on the sign and significance levels of both the coefficient of the spatial lag on FDI and the direct impact estimate of the market potential variable. The paper yields robust results that provide significant empirical evidence for horizontal FDI as the main driver of Austrian outbound FDI in Europe. This result is strengthened by the indirect impact estimate of the market potential variable indicating that spatial spillovers do not matter

Suggested Citation

  • Manfred M. Fischer & Nico Pintar & Benedikt Sargant, 2016. "Austrian Outbound Foreign Direct Investment in Europe:A spatial econometric study," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 10(1), pages 1-22, JUNE.
    • Handle: RePEc:rrs:journl:v:10:y:2016:i:1:p:1-22
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    References listed on IDEAS

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    1. Neary, J. Peter, 2009. "Trade costs and foreign direct investment," International Review of Economics & Finance, Elsevier, vol. 18(2), pages 207-218, March.
    2. Manfred M. Fischer & Arthur Getis (ed.), 2010. "Handbook of Applied Spatial Analysis," Springer Books, Springer, number 978-3-642-03647-7, January.
    3. Baltagi, Badi H. & Egger, Peter & Pfaffermayr, Michael, 2007. "Estimating models of complex FDI: Are there third-country effects?," Journal of Econometrics, Elsevier, vol. 140(1), pages 260-281, September.
    4. Sjoerd Beugelsdijk & Jean-François Hennart & Arjen Slangen & Roger Smeets, 2010. "Why and how FDI stocks are a biased measure of MNE affiliate activity," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(9), pages 1444-1459, December.
    5. Brainard, S Lael, 1997. "An Empirical Assessment of the Proximity-Concentration Trade-off between Multinational Sales and Trade," American Economic Review, American Economic Association, vol. 87(4), pages 520-544, September.
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    7. Sjoerd Beugelsdijk & Jean-François Hennart & Arjen Slangen & Roger Smeets, 2010. "Why and how FDI stocks are a biased measure of MNE affiliate activity," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(9), pages 1444-1459, December.
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    13. Bergstrand, Jeffrey H. & Egger, Peter, 2007. "A knowledge-and-physical-capital model of international trade flows, foreign direct investment, and multinational enterprises," Journal of International Economics, Elsevier, vol. 73(2), pages 278-308, November.
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    Cited by:

    1. Manfred M. Fischer & Nico Pintar & Benedikt Sargant, 2016. "Austrian Outbound Foreign Direct Investment in Europe:A spatial econometric study," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 10(1), pages 1-22, JUNE.
    2. Tamás Krisztin & Philipp Piribauer, 2021. "A Bayesian spatial autoregressive logit model with an empirical application to European regional FDI flows," Empirical Economics, Springer, vol. 61(1), pages 231-257, July.
    3. Tamás Krisztin & Philipp Piribauer, 2021. "Modelling European regional FDI flows using a Bayesian spatial Poisson interaction model," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 67(3), pages 593-616, December.

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    More about this item

    Keywords

    Foreign direct investment; panel econometrics; spatial econometrics; spatial; Durbin model; fixed effects;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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