Abstract
Building on sociology theory of space that separates physical geography from its constructed connotations, we suggest that the impact of countries’ geographic location on their FDI performance is contingent upon their idiosyncratic characteristics and their connectivity to other countries. Quantile regression analyses of FDI flows and stocks to 159 countries observed during 1980-2011 show that countries with different endowments and varying levels of connectivity experience the consequences of geographic location differently. The relationships vary significantly across the FDI distribution, with the impact of the contingency effects diminishes as the volumes of FDI increase. These findings entail that geography is not destiny, and its consequences can be shaped by actions of policymakers and the strategies of MNEs. They call for the development of FDI location theory that acknowledges the contingency effects and the changing determinants of FDI across different levels of the FDI distribution.
Published Version
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