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Firm heterogeneity in modelling foreign direct investment location decisions

Author

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  • Simona Rasciute
  • Eric Pentecost
  • Ben Ferrett

Abstract

This article investigates the probability of the FDI location decisions of multinational enterprises using a mixed logit panel data model, which is the most flexible discrete choice model. We employ a three-level data set, which includes over 1100 FDI location decisions into 13 alternative Central and Eastern European Countries (CEECs) over an 11-year period. Our empirical results on the effect of host country, industry and firm characteristics on the probability of undertaking FDI in a particular location are significant and consistent with the predictions of our theoretical model.

Suggested Citation

  • Simona Rasciute & Eric Pentecost & Ben Ferrett, 2014. "Firm heterogeneity in modelling foreign direct investment location decisions," Applied Economics, Taylor & Francis Journals, vol. 46(12), pages 1350-1360, April.
  • Handle: RePEc:taf:applec:v:46:y:2014:i:12:p:1350-1360
    DOI: 10.1080/00036846.2013.872760
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    Cited by:

    1. Kangmin Wu & Yang Wang & Yuyao Ye & Hongou Zhang & Guangqing Huang, 2019. "Relationship Between the Built Environment and the Location Choice of High-Tech Firms: Evidence from the Pearl River Delta," Sustainability, MDPI, vol. 11(13), pages 1-21, July.
    2. Lv, Ping & Curran, Louise & Spigarelli, Francesca & Barbieri, Elisa, 2021. "One country, many industries: Heterogeneity of Chinese OFDI motivations at meso level," China Economic Review, Elsevier, vol. 69(C).
    3. Shi Li & Hironobu Nakagawa, 2022. "Exchange rates and foreign direct investment: Evidence from Chinese firmā€level data," The World Economy, Wiley Blackwell, vol. 45(9), pages 2902-2923, September.
    4. Nielsen, Bo Bernhard & Asmussen, Christian Geisler & Weatherall, Cecilie Dohlmann, 2017. "The location choice of foreign direct investments: Empirical evidence and methodological challenges," Journal of World Business, Elsevier, vol. 52(1), pages 62-82.
    5. Omar Belkhodja, 2016. "FDI Location Decision: Evidence from Firms Investing in China," International Journal of Business and Management, Canadian Center of Science and Education, vol. 11(6), pages 1-47, May.
    6. Witte, Caroline T. & Burger, Martijn J. & Pennings, Enrico, 2020. "When political instability devaluates home-host ties," Journal of World Business, Elsevier, vol. 55(4).

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