Geographical Distance and Motivation of Multinationals’ FDI——Based on the Data from Multinational Companies in the United States

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Abstract Geographic distance affects not only the scale of international direct investment, but also the motivation of multinationals when investing directly abroad. In this paper, the author develops a three-economy model to analyze the impact of geographical distance on three types of foreign direct investment. The empirical analysis using data on operations of US multinationals’ foreign affiliates from BEA shows that, as the geographical distance between home and host country increases, the share of market-seeking and third-country-oriented FDI increases, but the share of home-country-oriented FDI falls.

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	YANG Zhen-Ceng

Key words： Imported Services Intermediate Input Import Structure Industrial Growth Effect Openness of Service Sector Imported Services Intermediate Input Import Structure Industrial Growth Effect Openness of Service Sector Foreign Direct Investment Geographical Distance Motivation of FDI Trade Costs

Received: 2017-05-11

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