About the Speaker:

Professor Rajan has been with George Mason University since 2006. He is also Visiting Associate Professor, School of Economics University of Adelaide, Associate Faculty, Mason Center for Global Studies George Mason University, Adjunct Fellow, Research and Information System for Developing Countries, New Delhi, and Visiting Scholar, Claremont Institute for Economic Policy Studies, Claremont Colleges, California. His research interests are in Monetary, Investment and Trade issues with particular interest in Asia. He has published over 100 academic journal articles, book chapters and monographs and 90 policy briefs, commentary pieces and book reviews on various aspects of international economics.

Abstract:

This paper investigates sources and determinants of foreign direct investment (FDI) flows to developing Asia using bilateral FDI flows for the period 1990-2005. The Triad (composed of Japan, EU, and the US) has accounted for about 35-40% of FDI inflows to developing Asia in recent years, with Japan being the single largest investor. Intra-developing Asian flows has also accounted for about 35% of total inflows to the region, and these shares have remained fairly stable between 1997-2004. With regard to the determinants of FDI flows, the paper finds that an augmented gravity model fits the data fairly well. We pay particular attention to possible differences in the determinants of FDI flows to developing Asian economies from the rest of the Asia-Pacific region, compared to those from non-regional OECD economies, with an emphasis on the roles of distance and time zone differences. To preview the main conclusion, we find that the elasticity of distance is greater for FDI from the non-Asia Pacific OECD economies than intraregional Asian flows. However, this difference disappears when one accounts for differences in time zones.

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