Substitution between Foreign Capital in China, India, the Rest of the World, and Latin America : Much Ado about Nothing?
This paper explores the impact of the emergence of China and India on foreign capital stocks in other economies. Using bilateral data from 1990-2003 and drawing from the knowledge-capital model of the multinational enterprises to control for fundam...
| Main Authors: | , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2007/09/8339154/substitution-between-foreign-capital-china-india-rest-world-latin-america-much-ado-nothing-substitution-between-foreign-capital-china-india-rest-world-latin-america-much-ado-nothing http://hdl.handle.net/10986/7338 |
| Summary: | This paper explores the impact of the
emergence of China and India on foreign capital stocks in
other economies. Using bilateral data from 1990-2003 and
drawing from the knowledge-capital model of the
multinational enterprises to control for fundamental
determinants of foreign capital stocks across countries, the
evidence suggests that the impact of foreign capital in
China and India on other countries' foreign capital
stocks has been positive. This finding is robust to the use
of ordinary least squares, Poisson, and negative binomial
estimators; to the inclusion of time and country-pair fixed
effects; to the inclusion of natural-resource endowments;
and to the use of the sum of foreign capital stocks in Hong
Kong (China) and mainland China instead of using only the
latter's foreign capital stocks. There is surprisingly
weak evidence of substitution in manufacturing foreign
capital stocks away from Central America and Mexico in favor
of China, and from the Southern Cone countries to India, but
these findings are not robust to the use of alternative
estimation techniques. |
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