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Sources Of Foreign Direct Investment Flows To Developing Asia: The Importance Of Time Zone

Author

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  • RABIN HATTARI

    (Asian Development Bank, Indonesia Resident Mission, Gedung BRI II, 7th Floor, JI. Jend. Sudirman Kav. 44-46, Jakarta 10210, Indonesia)

  • RAMKISHEN S. RAJAN

    (School of Public Policy, George Mason University, 3351 Fairfax Dr., Arlington VA 22201, USA)

Abstract

This paper investigates the determinants of foreign direct investment (FDI) flows to developing Asia using bilateral FDI flows for the period 1990 to 2005. We pay particular attention to possible differences in the determinants of FDI flows to developing Asian economies from the rest of the Asia-Pacific region compared to those from nonregional OECD economies, with an emphasis on the role of distance and time zone. We find that the elasticity of distance is much greater for FDI from the non–Asia-Pacific OECD economies than intraregional Asian flows. However, this difference disappears when one accounts for differences in time zones. The world is not flat; differences in time zones appear to act as a hindrance to FDI.

Suggested Citation

  • Rabin Hattari & Ramkishen S. Rajan, 2012. "Sources Of Foreign Direct Investment Flows To Developing Asia: The Importance Of Time Zone," China Economic Policy Review (CEPR), World Scientific Publishing Co. Pte. Ltd., vol. 1(02), pages 1-16.
    • Handle: RePEc:wsi:ceprxx:v:01:y:2012:i:02:n:s1793969012500136
    DOI: 10.1142/S1793969012500136
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    References listed on IDEAS

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    1. UNCTAD Secretariat, 2006. "World Investment Report 2005—Transnational Corporations and the Internationalization of R&D," Foreign Trade Review, , vol. 40(4), pages 85-108, January.
    2. repec:idb:brikps:9167 is not listed on IDEAS
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    Cited by:

    1. Rishav Bista & Rebecca Tomasik, 2017. "Time Zone Effect and the Margins of Exports," The World Economy, Wiley Blackwell, vol. 40(6), pages 1053-1067, June.
    2. Joachim Wagner, 2019. "Time zones and German exports: first evidence from firm-product level data," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(1), pages 181-198, February.

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    More about this item

    Keywords

    Developing Asia; distance; foreign direct investment (FDI); gravity model; time zone; F21; F23; F36;
    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
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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