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FDI and world heterogeneities: The role of absorptive capacities

Álvarez González, Isabel and Marín, Raquel (2008) FDI and world heterogeneities: The role of absorptive capacities. [Working Paper or Technical Report]


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It is generally agreed that foreign direct investment (FDI) flows can contribute to the local upgrading
of host economies, whereas the diverse technological strategies of multinational companies
(MNCs) can determine the existence and size of spillover effects. When considering FDI entry
modes, merger and acquisitions (M&As) reveal a higher level of interaction with local productive
systems than general FDI. Accordingly, their impacts may differ depending on the development
level of countries and on the characteristics of national systems. Our aim is to exam the relative
importance of local determinants explaining different choices of FDI entry. We explore both the
strengths of the traditional explanation of FDI flows as well as the relevance of institutional stability
and consolidation of national absorptive capabilities; the latter are considered key features of
national systems. Our findings confirm that the factors at a country level affecting general FDI
differ from those concerning cross-border M&As and support the need to investigate new drivers
for attraction of FDI. Structural factors explain better the behaviour of FDI, whereas the factors of
national systems of innovation are more closely correlated with the cross-border M&As trend.
Finally, although international inequalities persist when both developed and developing countries
are considered, it is interesting to note the importance of the heterogeneity that characterises the
developing world as a topic for further research.
RESUMEN: El propósito en este trabajo es
examinar la importancia relativa de los determinantes locales que explican las diversas opciones de
entrada de las empresas multinacionales. En el análisis se trata de contrastar cuál es el peso de los
factores predominantes en las explicaciones económicas más convencionales, así como el efecto de
la estabilidad institucional y el grado de consolidación de las capacidades nacionales de absorción.
Los resultados nos permiten confirmar que los factores condicionantes de los flujos de IDE en general,
difieren de los que atañen a las fusiones y adquisiciones transfronterizas, lo que justifica la
necesidad de explorar nuevos elementos de atracción de IDE. Mientras que los factores estructurales
explican bien el comportamiento de la IDE en general, los factores relacionados con los sistemas
nacionales de innovación están más estrechamente relacionados con las fusiones y adquisiciones.
Finalmente, aunque las desigualdades internacionales persisten al analizar conjuntamente
países desarrollados y en desarrollo, tiene una especial relevancia la heterogeneidad que caracteriza
al mundo en desarrollo para futuras investigaciones.

Item Type:Working Paper or Technical Report
Uncontrolled Keywords:Flujos de inversión directa extranjera (IDE), Empresas multinacionales
Subjects:Social sciences > Economics > Business enterprises
Series Name:Working Papers
ID Code:10120

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Deposited On:10 Feb 2010 12:33
Last Modified:06 Feb 2014 08:38

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