A comparative study of foreign direct investment flow using diffusion models

Abstract

In this work, we apply an improvement dynamic model of the foreign direct investment (FDI) flow to analyze the evolution of FDI flow. In comparison with the fundamental growth model of FDI, the simulation result is further accurate if the asymmetric growth pattern and heterogeneity of the potential adopters are considered. According to the result, the internal influence dominates the growth of FDI flow from Taiwan to China during 2001-2006, taking the electronics industry for example.