Relative factor abundance and FDI factor intensity in developed countries

Melbourne Institute Working Paper No. 12/06

Date: May 2006


Alfons Palangkaraya
Andreas Waldkirch


This study looks at the link between the patterns of trade-revealed comparative advantage and net inward foreign direct investment in five developed countries: France, Italy, Japan, the United Kingdom, and the United States. Despite assertions that market access is the primary motive for foreign direct investment flows among developed countries, the study confirms an earlier study which found a significant role of comparative advantage in determining inflows of foreign direct investment in developed countries, especially in the services industry.

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