Transportation Infrastructure and Market and Supplier Access: How Do They Shape Foreign Direct Investment?

Natalia Vechiu

2023

Abstract

Although the benefits of transportation infrastructure for economic and social development are generally unquestionable, depending on the transportation mode and the economic development of countries, sometimes transportation infrastructure does not have the expected positive impacts, or it may even hinder economic development. In this paper, we focus on the impact of different types of transportation infrastructure on foreign direct investments, in a close relation to the market/supplier access as an essential determinant for FDIs and thus, a potential significant interaction term with transportation infrastructure. Based on the new economic geography models, we attempt to distinguish between international and domestic transportation infrastructure in destination countries and test their impact on bilateral FDI stocks, in a gravity type setting. We take the liner shipping bilateral connectivity index as a proxy for international infrastructure and railroads density as a proxy for the domestic one. Using a panel dataset from 2008 to 2012, we find evidence that different transportation infrastructures have different impacts depending on the countries’ economic development level: international infrastructure has a strong and significant positive impact on FDIs, whereas the impact of railroads depends on destination countries’ economic development.

Paper Citation

in Harvard Style

Vechiu N. (2023). Transportation Infrastructure and Market and Supplier Access: How Do They Shape Foreign Direct Investment?. In Proceedings of the 5th International Conference on Finance, Economics, Management and IT Business - Volume 1: FEMIB, ISBN 978-989-758-646-0, SciTePress, pages 89-97. DOI: 10.5220/0011970700003494

in Bibtex Style

@conference{femib23,
author={Natalia Vechiu},
title={Transportation Infrastructure and Market and Supplier Access: How Do They Shape Foreign Direct Investment?},
booktitle={Proceedings of the 5th International Conference on Finance, Economics, Management and IT Business - Volume 1: FEMIB,},
year={2023},
pages={89-97},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0011970700003494},
isbn={978-989-758-646-0},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 5th International Conference on Finance, Economics, Management and IT Business - Volume 1: FEMIB,
TI - Transportation Infrastructure and Market and Supplier Access: How Do They Shape Foreign Direct Investment?
SN - 978-989-758-646-0
AU - Vechiu N.
PY - 2023
SP - 89
EP - 97
DO - 10.5220/0011970700003494
PB - SciTePress