Economic determinants of inter- and intra-FDI in East Asia

The authors searched for economic determinants of bilateral foreign direct investment (FDI) in 15 East and Southeast Asian economies between 1990 and 2005. Estimation results from a gravity model using market access, comparative advantage and policy-driven incentives as variables suggest that multinational companies inside and outside the region had dissimilar FDI incentives and concerns regarding relative factor costs, import duties, geographic distance, and language. In addition, the results suggest a positive relationship between increased regional trade and FDI in East and Southeast Asia