The spatial econometrics of FDI and third country effects

<Para ID="Par1">Different fundamental methodological spatial econometric issues are discussed not yet addressed by the existent empirical literature on FDI and third country effects that explains why it has failed to find results consistent with formal theory. This is demonstrated by taking the baseline spatial econometric model developed by Blonigen et al. (Eur Econ Rev 51:1303–1325, <CitationRef CitationID="CR5">2007</CitationRef>) as point of departure and using US data on outbound FDI into 20 European countries observed over the 1999–2008 period. By refining the spatial econometric approach, we find significant empirical evidence in favor of competition among European countries in attracting US companies, and results that are consistent with export-platform and pure vertical FDI motives. Copyright Springer-Verlag Berlin Heidelberg 2015