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Please use this identifier to cite or link to this item: http://hdl.handle.net/1860/1838

Title: Information technology and bilateral FDI: theory and evidence
Authors: Jeon, Bang Nam
Tang, Linghui
Zhu, Lei
Keywords: Communication cost;FDI;Distance
Issue Date: Dec-2005
Publisher: Center for Intenational Economics Sejong Institution
Citation: Journal of Economic Integration, 20(4): pp. 613-630.
Abstract: This paper investigates the impact of communication cost on the FDI activities of multinational corporations (MNCs). First, we provide a theoretical foundation for a gravity-type FDI model, which shows that physical distance and communication technology are important determinants of FDI activities. Second, we apply the IT-augmented gravity model to bilateral FDI data for a total of 47 OECD and non-OECD countries from 1980 to 1997 and find that distance is negatively related to inward FDI stocks while the growth of IT, measured by teledensity and celldensity, has encouraged FDI significantly. The impact is found to be more prominent on FDI from G7 countries to OECD countriesthan to non-OECD countries, and more prominent in the 1990s than in the 1980s. Moreover, IT plays a more effective role by reducing communication cost when distance is beyond a threshold range.
URI: http://hdl.handle.net/1860/1838
Appears in Collections:Faculty Research and Publications (Economics & International Business)

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