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Transactions: A New Look at Service Sector Foreign Direct Investment in Asia

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  • Kirkegaard, Jacob Funk

    (Peterson Institute for International Economics)

Abstract

This paper presents new micro-level data consisting of individual greenfield investment projects and mergers and acquisitions as a source for detailed analysis of service sector cross-border investment flows among the Asian Development Bank (ADB) regional members. The new transactional foreign direct investment (FDI) data are methodologically distinct from traditional BPM5- compliant FDI data but found to yield generally comparable aggregates, when compared with the latest available International Monetary Fund (IMF) data from the Comprehensive Direct Investment Survey for the ADB regional members. The service sectors are found to receive considerably larger amounts of foreign investment, when compared with the Asian region’s manufacturing and raw materials sectors. Organisation for Economic Co-operation and Development (OECD) countries account for roughly three-quarters of total recorded inward service sector FDI of about $2 trillion, relatively evenly split between the United States, the EU-27, and regional OECD-level-income countries. The presence of sizable regional “upward flowing” service sector investments into OECD-level- income economies is verified. Preliminary policy conclusions are drawn based on the new transactional FDI data results concerning prospects for regional service sector liberalization, threshold income levels for inward service sector FDI, upward-flowing regional services FDI, and preferred modes of service sector investments.

Suggested Citation

  • Kirkegaard, Jacob Funk, 2012. "Transactions: A New Look at Service Sector Foreign Direct Investment in Asia," ADB Economics Working Paper Series 318, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0318
    Note: http://www.adb.org/sites/default/files/pub/2012/economics-wp318.pdf
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    Cited by:

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    2. Peter W. Daniels & Pengfei Ni, 2014. "Urbanisation and changes in the sectoral structure of economic development: the scale of the manufacturing sector in Chinese cities and the shift towards service industry," Working Papers hal-00943972, HAL.
    3. Sarah Bauerle Danzman, 2016. "Contracting with Whom? The Differential Effects of Investment Treaties on FDI," International Interactions, Taylor & Francis Journals, vol. 42(3), pages 452-478, May.

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    More about this item

    Keywords

    Service sector FDI; East Asia; greenfield; M&A; upward-flowing FDI;
    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
    • N75 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Asia including Middle East
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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