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Economic development, cultural differences and FDI

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  • Yener Kandogan

Abstract

The literature has long analysed the effects of national cultural distance on the volume of cross-border FDIs. Considering the increase in significance of FDI originating from developing countries, this study compares the effect of cultural differences on the stock of FDI from and to countries of various levels of economic development to explain how economic development affects the impact of cultural distance on FDI. Results suggest that the cultural differences tend to be bigger barriers for multinationals from developing countries, but they also learn quickly how to deal with such differences.

Suggested Citation

  • Yener Kandogan, 2016. "Economic development, cultural differences and FDI," Applied Economics, Taylor & Francis Journals, vol. 48(17), pages 1545-1559, April.
    • Handle: RePEc:taf:applec:v:48:y:2016:i:17:p:1545-1559
    DOI: 10.1080/00036846.2015.1102847
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    Cited by:

    1. Hong, Seiwoong & Lee, Junyong & Oh, Frederick Dongchuhl & Shin, Donglim, 2023. "Religion and foreign direct investment," International Business Review, Elsevier, vol. 32(1).
    2. Kui Ming Tiong, 2017. "Cross-cultural Adaptation Index of Chinese Expatriates in Malaysia: Extended Location-Specific Advantages," GATR Journals gjbssr474, Global Academy of Training and Research (GATR) Enterprise.
    3. Helga Kristjansdottir & Fjola Bjork Karlsdottir, 2020. "Uk Foreign Direct Investment In The Oecd, Culture And Geography," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 6(5).
    4. Xin Xu & Zizhen Liu, 2023. "ESG, Cultural Distance and Corporate Profitability: Evidence from Chinese Multinationals," Sustainability, MDPI, vol. 15(8), pages 1-23, April.
    5. Mumtaz Hussain Shah, 2017. "Inward FDI in East Asian & Pacific Developing Countries due to WTO Led Liberalisation," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 9(2), pages 1-20, June.
    6. Gorodnichenko, Yuriy & Kukharskyy, Bohdan & Roland, Gerard, 2024. "Cultural distance, firm boundaries, and global sourcing," Journal of Development Economics, Elsevier, vol. 166(C).
    7. Olufemi Adewale Aluko & Muazu Ibrahim & Xuan Vinh Vo, 2022. "Toward achieving sustainable development: Searching for economic development and globalization thresholds in the foreign direct investment‐environmental degradation nexus," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(4), pages 678-692, August.
    8. Bingqiang Li & Xi Li & Jinzhi Li & Hongchun Lin & Baojuan Rui, 2023. "Empirical Analysis of Export Tax Rebate on Inwards Foreign Direct Investment in China," SAGE Open, , vol. 13(4), pages 21582440231, December.

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