Does sub-sectoral FDI matter for trade in emerging economies? Evidence from nonlinear ARDL approach

Jithin, P; Babu, M. Suresh

doi:10.1080/09638199.2020.1795703

Cited by 4 publications

(1 citation statement)

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“…Services FDI accounts for 2/3 of the total FDI in the case of emerging economies, and it accounts for a commendable share in the country's output. Only a few studies have been conducted on the services sector FDI (Ramasamy & Yeung, 2010; Boddewyn et al, 1986; Kolstad & Villanger, 2008; Yin et al, 2014; Markusen & Strand, 2009; Yu & Walsh, 2010; Jithin and Sureshbabu, 2020, 2021). Some of the empirical studies suggest that there is no need for a separate theory to explain FDI in services (Kolstad & Villanger, 2008; Ramasamy & Yeung, 2010; Yin et al, 2014).…”

Section: Stylized Facts and Literature Reviewmentioning

confidence: 99%

Are the determinants of foreign direct investment the same within the service sector? Evidence from bootstrap based bias corrected fixed effects model

Jithin

Sureshbabu

2021

Journal of Public Affairs

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Using sectoral as well as subsectoral foreign direct investments (FDI) data, we explore the determinants of FDI in services at both sectoral and sub‐sector levels of 25 emerging economies for the period 1999–2016. We employ a bootstrap‐based bias‐corrected fixed effects model to analyze whether FDI's determinants vary within the service sector. Our results show that market size, market potential, natural resources endowments, and agglomeration effects are positively associated with the FDI in services and its subsectoral levels. The sectoral disaggregated analysis shows that the variables that attract FDI in services do not vary much from financial to nonfinancial services. This study suggests that there is no need for a separate theory for explaining FDI determinants in financial and nonfinancial services though some modifications are to be made. Before making modifications, we have to consider the salient features of service sector FDI, such as intangibility, inseparability, perishability, heterogeneity, and commercial presence.

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