Bilateral Linkages with OECD and FDI Inflows in Leading Developing Countries

By Mumtaz Hussain Shah.

Published by The Social Sciences Collection

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Article: Print $US10.00
Article: Electronic $US5.00

In this paper I investigate the effect of bilateral
linkage factors on FDI inflows into leading developing
countries. Linkage factors take account of the
relationships between a particular dyad of source and host
country, or a host country / a source country and other
countries in the region or world. I use the standard
gravity model approach, utilising annual data for 12
developing host and 16 OECD source countries from 1990 to
2007, to demonstrate that the increased association between
a developed and a developing country is associated with
large positive foreign direct investment inflows to the
developing country. I find that a bilateral investment
treaty or preferential trade agreement results in increased
FDI inflows, and are increasing with the market size of the
partners, intellectual property standards in the host
economy and their proximity to each other. Moreover, I show
that this effect occurs not only in the case of bilateral
accords but also multilateral and global pacts involving
other countries, signalling increased commitment of the
host country to the potential overseas investors.

Keywords: Foreign Direct Investment, Preferential Trade Agreements, Bilateral Investment Treaties, Intellectual Property Rights, Leading Developing Countries, Taxation Treaties, Customs Union, Colonial Ties

International Journal of Interdisciplinary Social Sciences, Volume 5, Issue 7, pp.255-270. Article: Print (Spiral Bound). Article: Electronic (PDF File; 821.968KB).

Dr Mumtaz Hussain Shah

PhD Student, Department of Economics, University of Leicester, Leicester, Leicestershire, UK

I am 30, a Pakistani, and at present a research student at the department of Economics, University of Leicester pursuing a PhD degree. My primary interest is in foreign direct investments (FDI) in developing countries. The inflow of FDI into developing countries has witnessed a constant increase over the last 20 years but has significantly varied between them over time.I intend to find how they can compete with other countries and enhance their attractiveness for potential investors/multinational companies. Prior to Leicester, I have an MBA degree fron ESA Lille II France and have studied economics as one of the majors during undergrad at Government College University Lahore Pakitan.


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