We construct a gravity model of worldwide foreign direct investment stock (FDI) in order to study the effect of religion on FDI allocation. We establish empirically that both bilateral religious similarity and bilateral religious diversity foster FDI at the country pair level. These apparently...

This paper studies the effect of energy market integration (EMI) on foreign direct investment (FDI). EMIs diminish energy uncertainty and price volatility in the host country and affect FDI through two channels: first, by harmonizing energy prices and, second, by reducing price dispersion. FDI...

To serve foreign markets, firms can either export or set up a local subsidiary through horizontal Foreign Direct Investment (FDI). The conventional proximity-concentration theory suggests that FDI substitutes for trade if distance between countries is large, while exports become more important...

There is a controversy about the extent to which bilateral investment treaties (and double taxation treaties) lead to increased FDI flows. This text – the overview chapter of a volume that brings together the literature on this subject – draws the conclusions for these various contributions

In order to diversify their risks, firms facing increased demand uncertainty in their domestic market may choose to increase their investment abroad by transferring production to the more stable host economies. Using a gravity model, we test the assumption that foreign direct investment is...

Using bilateral capital flows data from 10 advanced reporting economies — with over 186 bilateral country pairs — for 2000 to 2016, this paper provides strong evidence on the significance of gravity factors, including distance and bilateral trade ties, in explaining cross-border financial...

The paper develops a new stand-alone structural gravity model for explaining bilateral FDI patterns. We employ the model to analyse the impact of preferential trade agreements (PTAs), bilateral investment treaties (BITs) and other policies on bilateral foreign direct investment (FDI). We use the...

We propose a new explanation for the granular origins of gravity in decentralized investment markets based on newly uncovered facts from large cross-border commercial real-estate transactions. Across a wide range of countries, buyers preferentially match with counterparties from own or proximate...

Gravity equations are a widely used tool in the international business literature to explain country-level trade and FDI flows. Against the background of its increased popularity and data availability, a range of commonly made econometric mistakes have recently been discussed in the literature,...