The Impact of CAGE Institutional Distances and Motivations for Internationalization on the Brazilian Foreign Direct Investment Outflows

Ferreira, Manuel Portugal; Falcão, Marcelo Braga

doi:10.15728/bbr.2019.16.2.4

Manuel Portugal Ferreira ^††Universidade Nove de Julho, São Paulo, SP, Brazil; Instituto Politécnico de Leiria, Portugal. E-mail: manuel.portugal.ferreira@gmail.com

Universidade Nove de Julho, São Paulo, SP, Brazil

Instituto Politécnico de Leiria, Portugal

http://orcid.org/0000-0002-4642-4605

Marcelo Braga Falcão ^ΩΩUniversidade Nove de Julho, São Paulo, SP, Brazil. E-mail: mfalcaox@gmail.com

Universidade Nove de Julho, São Paulo, SP, Brazil

http://orcid.org/0000-0002-2395-8671

^†Universidade Nove de Julho, São Paulo, SP, Brazil; Instituto Politécnico de Leiria, Portugal. E-mail: manuel.portugal.ferreira@gmail.com

^ΩUniversidade Nove de Julho, São Paulo, SP, Brazil. E-mail: mfalcaox@gmail.com

	Variables	Description	Data source
Dependent variable	FDI	Investment that involves a long-term relationship and that reflects a lasting interest and control by a domestic entity in an economy (foreign direct investor or the parent company).	FMI, 2013IMF. International Monetary Fund. Outward foreign direct investment and domestic investment: The case of developing countries. International Monetary Fund Working Paper, 2013.
Independent variables	Cultural distance	Differences between religious beliefs, races, social norms and languages.	Ghemawat, 2014GHEMAWAT, P. CAGE comparator™ - Analyze distances and differences between countries. Disponível em: <http://www.ghemawat.com/cage/,2014>. Acesso em 02 fev. 2014. http://www.ghemawat.com/cage/,2014...
	Administrative distance	Differences in several factors, including lack of colonial ties, lack of political and monetary association, political hostility, governmental policy, and institutional weakness.	Ghemawat, 2014GHEMAWAT, P. CAGE comparator™ - Analyze distances and differences between countries. Disponível em: <http://www.ghemawat.com/cage/,2014>. Acesso em 02 fev. 2014. http://www.ghemawat.com/cage/,2014...
	Geographic distance	Differences in several factors, including physical distance, lack of common borders, lack of access to rivers and seas, weaknesses in transport and communication and climate.	Ghemawat, 2014GHEMAWAT, P. CAGE comparator™ - Analyze distances and differences between countries. Disponível em: <http://www.ghemawat.com/cage/,2014>. Acesso em 02 fev. 2014. http://www.ghemawat.com/cage/,2014...
	Economic distance	Differences in consumer income, cost and quality of infrastructure and natural, financial and human resources.	Ghemawat, 2014GHEMAWAT, P. CAGE comparator™ - Analyze distances and differences between countries. Disponível em: <http://www.ghemawat.com/cage/,2014>. Acesso em 02 fev. 2014. http://www.ghemawat.com/cage/,2014...
	Search for markets	Size of the market of the recipient country (GDP per capita).	WDI, 2013WORLD BANK. WDI - World Development indicators. Disponível em: <http://http://data.worldbank.org/data-catalog/world-development-indicators>. Acesso em: 27 nov. 2013. http://http://data.worldbank.org/data-ca...
	Search for strategic resources	Availability of resources related to knowledge (patents).	WIPO, 2013WIPO. World Intellectual Property Organization. Statistics on worldwide patent activity. Disponível em: <http://www.wipo.int/ipstats/en/statistics/patents/wipo_pub_931.html#a13>. Acesso em: 31 jan. 2013. http://www.wipo.int/ipstats/en/statistic...
Control variables	International trade	The sum of exports and imports of goods and services measured as a percentage of gross domestic product.	WDI, 2013WORLD BANK. WDI - World Development indicators. Disponível em: <http://http://data.worldbank.org/data-catalog/world-development-indicators>. Acesso em: 27 nov. 2013. http://http://data.worldbank.org/data-ca...
	Inflation	Inflation measured by the consumer price index reflects the annual percentage change in the average cost to the consumer of the purchase of a basket of goods and services that can be corrected or changed at specific intervals, for example, yearly.	WDI, 2013WORLD BANK. WDI - World Development indicators. Disponível em: <http://http://data.worldbank.org/data-catalog/world-development-indicators>. Acesso em: 27 nov. 2013. http://http://data.worldbank.org/data-ca...
	Exchange rate	Monetary value of the currency of one country over another.	IMF, 2017IMF. International Monetary Fund. IMF Exchange rates. Disponível em: <https://www.imf.org/external/np/fin/ert/GUI/Pages/CountryDataBase.aspx. Acesso em: 02 ago. 2017. https://www.imf.org/external/np/fin/ert/...

Country	FDI (USD Millions) and %	Country	FDI (USD Millions) and %
Austria	47,033.48 (37.5%)	Bolivia	92.56 (0.08%)
Netherlands	19,929.98 (15.9%)	Japan	87.87 (0.08%)
United States	13,958.59 (11.1%)	New Zealand	72.38 (0.07%)
Spain	11,852.47 (9.45%)	India	64.65 (0.06%)
Denmark	6,634.41 (5.29%)	Ecuador	46.00 (0.05%)
Argentina	5,266.98 (4.20%)	Mozambique	43.44 (0.04%)
Portugal	2,801.33 (2.23%)	El Salvador	11.00 (0.04%)
Hungary	2,736.65 (2.18%)	Australia	8.00 (0.010%)
Uruguay	2,610.49 (2.08%)	Israel	6.00 (0.06%)
Peru	2,380.81 (1.90%)	United Arab Emirates	6.00 (0.005%)
Canada	1,336.63 (1.06%)	Egypt	5.00 (0.004%)
United Kingdom	1,184.00 (0.95%)	Haiti	5.00 (0.004%)
France	1,061.80 (0.85%)	Czech Republic	4.70 (0.004%)
Colombia	920.50 (0.73%)	Libya	3.00 (0.0024%)
Venezuela	841.44 (0.68%)	Russia	3.00 (0.0024%)
Chile	762.96 (0.61%)	Cuba	2.00 (0.002%)
Mexico	756.22 (0.60%)	Malaysia	2.00 (0.002%)
Paraguay	396.81 (0.31%)	Mali	2.00 (0.002%)
Ireland	387.53 (0.32%)	Romania	2.00 (0.002%)
Angola	382.09 (0.31%)	Turkey	2.00 (0.002%)
Belgium	381.69 (0.31%)	Malta	1.92 (0.002%)
Italy	283.88 (0.23%)	Croatia	1.00 (0.001%)
Switzerland	219.00 (0.18%)	Nicaragua	1.00 (0.001%)
Namibia	215.65 (0.17%)	Oman	1.00 (0.001%)
Germany	188.41 (0.15%)	Guiney	0.46 (0.0004%)
Slovakia	124.32 (0.10%)	Finland	0.32 (0.0004%)
China	111.00 (0.09%)	Poland	0.17 (0.0001%)
Dominican Rep.	103.14 (0.09%)

	Mean	Standard Deviation	1	2	3	4	5	6	7	8	9	10
1. FDI	4.29	3.27	1.000
2. Cultural Distance	4.39	2.07	-0.552^ p < 0.01.	1.000
3. Administrative distance	13.48	2.02	-0.094	0.156	1.000
4. Geographic distance	5.18	2.99	-0.297^* * p < 0.05,	0.356^ p < 0.01.	0.380^ p < 0.01.	1.000
5. Economic distance	2.73	2.58	0.048	-0.054	0.270^* * p < 0.05,	0.172	1.000
6. Market seeking	5.45	1.83	0.595^ p < 0.01.	-0.374^ p < 0.01.	-0.071	0.018	-0.216	1.000
7. Strategic resource seeking	6.09	3.87	0.306^* * p < 0.05,	-0.197	0.359^ p < 0.01.	0.466^ p < 0.01.	-0.102	0.678^ p < 0.01.	1.000
8. International trade	4.26	0.68	-0.079	0.123	0.127	0.063	0.047	-0.447^ p < 0.01.	-0.199	1.000
9. Inflation	1.16	0.95	-0.060	0.187	-0.321^* * p < 0.05,	-0.538^ p < 0.01.	-0.114	-0.125	-0.422^ p < 0.01.	-0.007	1.000
10. Exchange rate	1.08	1.67	0.024	-0.212	0.046	0.112	-0.037	-0.049	0.146	0.313	-0.199	1.000

	Model 1	Model 2	Model 3	Model 4	Model 5	Model 6	Model 7	Model 8	Model 9
Cultural Distance		-0.920^ p < 0,01.						-0.785
Administrative distance			-0.186						0.853
Geographic distance				-0.501^ p < 0,01.
Economic distance					0.062
Market seeking						1.289^ p < 0,01.		0.916	3.246
Strategic resource seeking							0.284^* * p < 0.05
Cultural dist.* Market seeking								0.023
Administrative dist.* Market seeking									-0.147
Geographic dist.* Market seeking
Economic dist.* Market seeking
Cultural dist.* Strategic resource seeking
Administrative dist.* Strategic resource seeking
Geographic dist.* Strategic resource seeking
Economic dist.* Strategic resource seeking
Control Variables
International trade	-0.660	0.173	-0.542	-0.451	-0.685	1.701	-0.062	1.758^* * p < 0.05	1.650
Inflation	-0.175	0.100	-0.305	-1.015	-0.154	0.095	0.280	0.232	0.007
Exchange rate	0.084	0.200	0.069	0.070	0.092	-0.022	-0.013	-0.199	-0.022
N	55	55	55	55	55	55	55	55	55
R²	0.011	0.316	0.023	0.160	0.014	0.399	0.100	0.532	0.411
			Model 10	Model 11	Model 12	Model 13	Model 14	Model 15	Model 16
Cultural distance					-0.951^ p < 0,01.				-0.400
Administrative distance						-1.892^* * p < 0.05			2.031
Geographical distance			-0.809				-0.993^ p < 0,01.		-0.096
Economic distance				0.260				-0.079	-0.004
Market seeking			1.039^* * p < 0.05	1.387^ p < 0,01.					3.103
Strategic resource seeking					0.199	-2.096	0.296	-0.001	2.499
Cultural dist.* Market seeking									-0.007
Administrative dist.* Market seeking									-0.123
Geographic dist.* Market seeking			0.051						-0.087
Economic dist.* Market seeking				0.001					0.056
Cultural dist.* Strategic resource seeking					0.010				0.035
Administrative dist.* Strategic resource seeking						0.243^* * p < 0.05			-0.221
Geographic dist.* Strategic resource seeking							0,037		0.010
Economic dist.* Strategic resource seeking								0,080	0.092
Control Variables
International trade			1.951	1.774	0.623	0.721	0.865	-0.165	1.258
Inflation			-0.664	-0.209	0.481	0.494	-0.510	0.503	-0.757
Exchange rate			-0.001	0.005	-0.253	-0.098	-0.022	-0.075	-0.139
N			55	55	55	55	55	55	55
R²			0.538	0.439	0.382	0.212	0.384	0.163	0.690

[1] ^†Universidade Nove de Julho, São Paulo, SP, Brazil; Instituto Politécnico de Leiria, Portugal. E-mail: manuel.portugal.ferreira@gmail.com

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The Impact of CAGE Institutional Distances and Motivations for Internationalization on the Brazilian Foreign Direct Investment Outflows

ABSTRACT