Faculty Publications

Title

Developed economy investment promotion agencies and emerging market foreign direct investment: The case of Chinese FDI in Canada

Document Type

Article

Keywords

Canada, China, Emerging market, FDI, Investment promotion agency, Psychic distance

Journal/Book/Conference Title

Journal of World Business

Volume

50

Issue

4

First Page

815

Last Page

825

Abstract

In light of the perceived benefits derived from inward FDI, many developed economies have systematically established investment promotion agencies (IPAs) to attract foreign investment. While IPAs in the past have been created by a wide variety of countries and regions, their target economies have overwhelmingly been in developed markets. The rise of emerging market MNEs is significantly changing this picture. We analyse the impact of IPAs on attracting emerging market FDI to developed economies by looking at the example of Chinese FDI into Canada. We find strong statistical evidence that the presence of Canadian provincial-level IPAs located in China increases the likelihood of Chinese firms locating in that Canadian province. Focusing on the role of IPAs in lowering liabilities of foreignness, we explore how differences in host and home country contexts may explain our findings.

Original Publication Date

10-1-2015

DOI of published version

10.1016/j.jwb.2015.04.005

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