Helen T. Naughton

FDI in space: Spatial autoregressive relationships in foreign direct investment

Abstract There are a number of theoretical reasons why foreign direct investment (FDI) into a host country may depend on the FDI in proximate countries. Such spatial interdependence has been largely ignored by the empirical FDI literature, with only a couple recent papers accounting for such issues in their estimation. This paper conducts a general examination of spatial interactions in empirical FDI models using data on US outbound FDI activity. We find that estimated relationships of traditional determinants of FDI are surprisingly robust to inclusion of terms to capture spatial interdependence, even though such interdependence is estimated to be significant. However, we find that both the traditional determinants of FDI and the estimated spatial interdependence are quite sensitive to the sample of countries one examines.

FDI in Space: Spatial Autoregressive Relationships in Foreign Direct Investment

Theoretical models of foreign direct investment (FDI) have only recently begun to model the role of third countries, and the empirical FDI literature has almost exclusively examined bilateral FDI data without recognizing the potential interdependence between FDI decisions to alternative host countries. This paper uses spatial econometric techniques to examine the spatial correlation between FDI to alternative (neighboring) regions. The sign of such correlations can provide evidence for or against alternative theories for FDI motivations. Using data on OECD countries from 1980-2000, we find evidence consistent with export platform FDI in Europe.

Social and Ecological Determinants of Land Clearing in the Brazilian Amazon: A Spatial Analysis

While tropical land clearing provides for the livelihoods of Brazilians from many socioeconomic backgrounds, it also affects climatological and ecological processes. To develop sustainable forest use, further study is needed to investigate the causes of tropical land clearing. This study uses spatial econometric techniques to estimate the effects of ecosystem productivity, measured by soil fertility and climate, and strategic interactions on municipal-level land clearing in the Brazilian Legal Amazon between 1975 and 1995. We find a negative relationship between soil fertility and land clearing. Furthermore, there is evidence of positive spatial interactions across municipalities. (JEL C31, Q24)

Trade and sustainability: the impact of the International Tropical Timber Agreements on exports

AbstractEnvironmental sustainability standards are often portrayed as a hindrance to trade and growth. A set of novel international environmental agreements (IEAs), the International Tropical Timber Agreements (ITTAs), seeks to promote both. The ITTAs encourage international trade for member nations while requiring sustainable timber practices. This paper uses the ITTAs as a case study to examine whether IEAs can lead to environmental cooperation at the same time as increasing trade. Membership in both the 1983 and 1994 ITTAs is examined for an effect on timber exports. The analysis is conducted using panel data for 165 countries between 1970 and 2011 while controlling for year fixed effects, country fixed effects and country-specific trend terms. Estimated ITTA effects vary by ITTA year, timber category and country type. Logs exports fell for both tropical and non-tropical country members, but these decreases were offset by increases in other timber category exports. Tropical country members increased plywood exports, while non-tropical country ITTA members increased exports of sawn wood and veneer sheets. Total exports of targeted timber were unaffected in non-tropical member countries, while the 1983 ITTA increased total exports for tropical countries. These results together suggest that the sustainability clauses entailed in ITTAs have not decreased total timber exports from member countries, but have shifted exports across timber categories.

Aggregation Issues of Foreign Direct Investment Estimation in an Interdependent World

This paper attempts to understand foreign direct investment (FDI) heterogeneity and offers useful insights about aggregation issues in FDI estimations by carrying out a spatial econometric analysis using affiliate‐level data on sales activities of Swedish multinational corporations around the globe. The results indicate that the multilayered nature of aggregation in FDI matters for empirical analysis. Affiliate‐level host‐country and third‐country sales activity provides evidence of a negative spatial lag or substitution of FDI in space, broadly supporting the export‐platform theory. For exports back to Sweden, we find a positive spatial lag suggesting agglomeration of production activities and vertical specialisation. The sequential aggregation from affiliate level to firm and country level provides evidence of a severe scale problem particularly in export‐platform FDI. This aggregation bias is likely present in many of the country‐level analyses in previous literature.