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Country risk, FDI flows and convergence trends in the context of the Investment Development Path

Author

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  • Frenken, Jonas Hub

    (UNU-MERIT, and Maastricht University)

  • Mbuvi, Dorcas

    (UNU-MERIT, and Maastricht University)

Abstract

Based on the identification of two transition phases within the Investment Development Path (IDP), this study explores the relationship between country risk and foreign direct investment (FDI) over time and in relation to the process of economic convergence between emerging and developed economies. The findings suggest that both economic - and business environment risk factors are closely related to FDI flows. Furthermore, it is found that as countries progress through the various stages of the IDP, economic convergence comes together with similar trends of convergence in economic - and business environment risk exposure. These simultaneous long-term developments plausibly contribute to the convergence of countries in terms of in- and outward FDI flows during the later stages of the IDP.

Suggested Citation

  • Frenken, Jonas Hub & Mbuvi, Dorcas, 2017. "Country risk, FDI flows and convergence trends in the context of the Investment Development Path," MERIT Working Papers 2017-005, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2017005
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    File URL: https://unu-merit.nl/publications/wppdf/2017/wp2017-005.pdf
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    Citations

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    Cited by:

    1. Justice G. Djokoto & Paragon Pomeyie, 2021. "Level of Income and the Investment Development Path Theory: Evidence From Africa," SAGE Open, , vol. 11(4), pages 21582440211, November.
    2. Yanfeng Liu & Xue Li & Xiaonan Zhu & Min-Kyu Lee & Po-Lin Lai, 2023. "The theoretical systems of OFDI location determinants in global north and global south economies," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-13, December.

    More about this item

    Keywords

    Country risk; foreign direct investment; FDI; investment flows; convergence; investment development path; emerging economices; developing economies;
    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
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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