Testing the Asset-seeking Hypothesis :through the Investments of Chinese and Indian Firms in Europe

Abstract

We use the investments of Chinese and Indian MNCs in Europe to test the hypothesis that the main motivation of the Southern MNCs for investing in the Northern countries is asset-or technology seeking. After showing that the previous work has not adequately tested this hypothesis due to its use of country-level FDI flow data, we conduct our tests with count data models tests. The results reveal that this motivation for Chinese MNCs is strong, whereas Indian MNCs, due to their excessive concentration in the UK and in software sector, have a weaker asset-seeking motivation than Chinese MNCs. JEL Classifications: F21, F23, O52, O57 Acknowledgements: We would like to thank an anonymous referee of this Journal for having allowed us to significantly improve this paper. ⓒ