Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/257068 
Year of Publication: 
2020
Citation: 
[Journal:] Economies [ISSN:] 2227-7099 [Volume:] 8 [Issue:] 1 [Article No.:] 19 [Publisher:] MDPI [Place:] Basel [Year:] 2020 [Pages:] 1-18
Publisher: 
MDPI, Basel
Abstract: 
The growth of Foreign Direct Investment (FDI) in developing countries over the last decade has attracted an intense academic and policy-oriented interest for its determinants. Despite the gravity model being considered a useful tool to approximate bilateral FDI flows, the literature has seen a growing debate in relation to its econometric specification, so that which is the best estimator for the gravity equation is far from conclusive. This paper examines the determinants of German outward FDI in Latin America and Asia for the period 1996-2012 by evaluating the performance of alternative Generalized Linear Model (GLM) estimators. Our findings indicate that Negative Binomial Pseudo Maximum Likelihood (NBPML) is the estimator best matched to our data, followed by Gamma Pseudo Maximum Likelihood (GPML). Furthermore, German FDI in Latin America is found to be predominantly vertical in nature, whereas that in Asia is mainly market-seeking.
Subjects: 
FDI determinants
generalized linear models
Germany
gravity models
outward foreign direct investment
JEL: 
F21
F23
C13
C33
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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