Foreign direct investment performance: a stochastic frontier analysis of location and variance determinants

Stack, M.M. ORCID: 0000-0002-9213-7607, Ravishankar, G. ORCID: 0000-0002-9281-7207 and Pentecost, E.J., 2015. Foreign direct investment performance: a stochastic frontier analysis of location and variance determinants. Applied Economics, 47 (30), pp. 3229-3242. ISSN 1466-4283

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Abstract

The opening up process of the eastern European countries was marked by greater integration of foreign direct investment (FDI) with their western neighbouring countries. Using the single step maximum likelihood (ML) approach to stochastic frontier analysis (SFA), the location and variance determinants of FDI are estimated using the knowledge capital (KK) model framework. The findings, based on a panel of bilateral FDI stocks from 10 western to 10 eastern European countries over the 1996 to 2007 period, suggest FDI is determined by both horizontal and vertical motives while the process of liberalisation and infrastructural developments significantly reduce the variance of FDI. In using a stochastic frontier specification of the KK model, the efficiency of FDI performance is identified relative to maximum levels. The bilateral efficiency scores suggest a mixed performance, indicating scope to improve the efficiency of FDI.

Item Type: Journal article
Alternative Title: FDI performance: a stochastic frontier analysis of location and variance determinants
Publication Title: Applied Economics
Creators: Stack, M.M., Ravishankar, G. and Pentecost, E.J.
Publisher: Taylor & Francis
Date: 2015
Volume: 47
Number: 30
ISSN: 1466-4283
Identifiers:
NumberType
10.1080/00036846.2015.1013612DOI
Divisions: Schools > Nottingham Business School
Depositing User: EPrints Services
Date Added: 09 Oct 2015 11:00
Last Modified: 08 Nov 2019 14:17
URI: http://irep.ntu.ac.uk/id/eprint/21275

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