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Nathapornpan Uttama and Popkarn Arwatchanakarn
''How do economic complexity and productive capacities foster foreign direct investment flows? Evidence from the Asian economies''
( 2023, Vol. 43 No.1 )
This study focuses on a critical question for Asian economies whether economic complexity and productive capacities influence foreign direct investment (FDI) flows. The analysis is carried out for FDI flows in 17 Asian countries from 1995 to 2020. A penalized Poisson pseudo-maximum likelihood regression with an adaptive lasso for consistent variable selection is utilized in the estimation. The major findings reveal that economic complexity has a negative influence on FDI flows, while productive capacity has a positive impact on FDI flows, particularly inward FDI. Most Asian economies are more likely to encourage foreign direct investment (investing countries) and to market themselves as foreign direct investment hubs (recipient countries) . Consequently, policymakers should encourage the transformation of economic complexity, the strengthening of productive capacity, and sustainable investment.
Keywords: Economic complexity, Productive capacities, Foreign direct investment
JEL: F2 - International Factor Movements and International Business: General
F4 - Macroeconomic Aspects of International Trade and Finance: General
Manuscript Received : Jan 03 2022 Manuscript Accepted : Mar 30 2023

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