This study builds on the existing literature by investigating the long-run locational determinants of FDI flows to Pacific Asia under the broad categories of cost-related, investment environment improving, macro-economic and the political ideology factors of the host country.

In this paper, we attempt to establish whether FDI has directly induced long-run effects on output in a selection of APEC countries or whether such an influence, if any, has been transmitted indirectly through spillover effects.

We employ the total factor productivity (TFP) index in growth accounting as a proxy for productivity growth to compare patterns and sources of output growth for a group of proximate countries in Asia-Pacific Economic Cooperation region.