2020 Fiscal Year Research-status Report
Does Inward FDI Create Comparative Advantage or is it Attracted to it?
| Project/Area Number |
19K01600
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| Research Institution | Yokohama National University |
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Principal Investigator |
C・R Parsons 横浜国立大学, 大学院国際社会科学研究院, 教授 (10334616)
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| Project Period (FY) |
2019-04-01 – 2022-03-31
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| Keywords | FDI / comparative advantage / higher income countries / lower income countries |
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| Outline of Annual Research Achievements |
After analyzing over 200,000 FDI projects worldwide we found a large,positive and statistically significant correlation between a host country`s comparative advantage and inward Greenfield FDI.However,we found that this relationship only holds for the lower-income countries. Results were robust across several specifications.A second paper examined Vietnam`s inward FDI in detail.Vietnam experienced a radical change in the comparative advantage in electronics following massive investment by Korea firms.We estimated that this investment was about 6% of GDP. We have so far, produced two full papers,both of which have been presented at 2 international conferences, 2 faculty seminars in the US, and at one domestic conference held in Japan.Both papers have been submitted to internationally refereed journal and are currently under review.
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| Current Status of Research Progress |
Current Status of Research Progress
2: Research has progressed on the whole more than it was originally planned.
Reason
Getting all the data in order and setting up the approaching estimation methodology (both theoretically and statistically) took a little more time than I had expected. But now that a specific, detailed approach has been established, we expect additional new findings to materialize at a faster rate. Thus far, two papers have been presented at various venue and both have been submitted to top international journals. Covid-19 forced us to cancel attendance to another big conference Shanghai in 2020. In the paper with our main results, we aimed at a top ranked journal and it has been initially rejected. We have made significant revisions based on the feedback and will submit that again next month. As will be discussed, below, we are now on track to expand our research agenda.
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| Strategy for Future Research Activity |
While the main research question of what role comparative advantage has played in the location of new FDI has been empirically answered by us, this has led to new research questions we plan to investigate. We have several ideas in mind. One idea is to better understand how increased involvement in GVCs affects new FDI. Also, we have extended our dataset from 2017, to 2020, so we can now also investigate the impact Covid-19 has had on worldwide FDI. Lastly, incorporating Patent data with the FDI and comparative advantage measures we have estimated to better understand FDI motivations is a third possible direction for our research agenda.
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| Causes of Carryover |
I will continue to work on FDI, so I will need to renew the license for the fDI Markets database. Also, if the Covid-19 situation improves I hope to present my results at an international conference abroad, possibly: Southern Economic Association, Houston, USA, Nov. 2021; The American Economic Association meetings, Boston, USA Jan 2022; and/or The Eastern Economic Association Conference, Boston, USA Feb/March, 2022. Any remaining budget will most likely be used for submission fees to journals,annual economic association membership dues, and possibly a new version of STATA statistical software.
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