Outward FDI determinants in large N and T panels under model uncertainty: the case of Japan and the US

Abstract

Traditionally, the main investor countries at a worldwide level have been Japan, the United States (US) and the European Union (EU). This Dissertation focuses on the cases of Japan and the US as investors, and the EU as one of the leading destination regions. To this aim, we analyse the determinants of Japanese and US FDI by using appropriate techniques to solve the variable selection problem and estimate efficiently in panels with large N and T dimensions. The main results indicate that horizontal FDI (HFDI) and vertical FDI (VFDI) strategies coexist in the destination countries as investment motivations for Japanese and US outward FDI (OFDI). Moreover, in the case of US OFDI, the euro has mainly favoured VFDI strategies. Finally, we also find evidence of long-run relationships between US FDI and host country characteristics.