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Do Large Foreign Direct Investment Inflows Behave Differently From Smaller Inflows? Evidence from Developing Countries

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  • Jagadish Prasad Sahu

    (Jagadish Prasad Sahu is an Assistant Professor at the School of Business, University of Petroleum and Energy Studies, Dehradun, India.)

Abstract

This article examines whether large inflows of foreign direct investment (FDI) behave differently from smaller inflows in a sample of 56 developing countries for the period 1990–2017. We use the quantile regression method to investigate whether the responsiveness of FDI inflows to various push and pull factors differs across the conditional distribution of the former. Our results show that the magnitudes of the coefficients are significantly different across quantiles of FDI inflows for a number of covariates. That is to say, the coefficients are significantly larger for the upper quantiles compared to the lower ones. The interquantile regressions, which estimate the quantile differences, confirm the finding that large FDI inflows are more responsive to their covariates than smaller inflows. Our results suggest that large inflows of FDI are indeed different, both quantitatively and qualitatively, from smaller inflows. Therefore, it is necessary to investigate the causes of large and smaller inflows separately for a better understanding of the determinants of FDI inflows to developing countries. JEL Classification: F21, F23, F41

Suggested Citation

  • Jagadish Prasad Sahu, 2020. "Do Large Foreign Direct Investment Inflows Behave Differently From Smaller Inflows? Evidence from Developing Countries," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 14(1), pages 86-106, February.
    • Handle: RePEc:sae:mareco:v:14:y:2020:i:1:p:86-106
    DOI: 10.1177/0973801019886488
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    1. Jagadish Prasad Sahu & Santosh Kumar Dash, 2021. "What Explains FDI Inflows to ASEAN Countries? Evidence from Quantile Regressions," Journal of Asian Economic Integration, , vol. 3(1), pages 25-37, April.

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    More about this item

    Keywords

    Foreign direct investment; Quantile regression; Interquantile regression; Developing countries;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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