The investment development path of newly developed countries

According to foreign direct investment (FDI) path theory, developed countries are grouped into two phases, known as the fourth and fifth phases. Fourth-phase countries (newly developed economies) show a technological and institutional "gap" in comparison with fifth-phase economies, which e...

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Bibliographic Details
Published in:International journal of the economics of business 2005-02, Vol.12 (1), p.123-137
Main Authors: Duran, Juan, Ubeda, Fernando
Format: Article
Language:English
Subjects:
Business studies
Developing countries
Development economics
Economic Development
F23
F43
Foreign direct investment
Foreign investment
Industrialized nations
International finance
International investment
Investment Development Path
Inward Direct Investment Stock
JEL Classifications: F21
JEL Classifications: F21, F23, F43
LDCs
Multinational corporations
Multinational enterprises
Outward Direct Investment Stock
Studies
Technological Gap
Theory
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Summary:According to foreign direct investment (FDI) path theory, developed countries are grouped into two phases, known as the fourth and fifth phases. Fourth-phase countries (newly developed economies) show a technological and institutional "gap" in comparison with fifth-phase economies, which explains their lesser capacity to generate direct investment. We found that these countries, which were less developed economies in the 1980s, had undergone a deep structural transformation. This transformation encouraged the multinationalization of firms, which is a differentiating element and one outcome of their development process. These results have clear policy implications: the governments of newly developed countries should take steps to increase the endowment of knowledge-intensive assets. The main contribution of this paper is the theoretical reformulation of the fourth phase of the investment development path theory.
ISSN:1357-1516
1466-1829
DOI:10.1080/1357151042000323076