Open Access Journal Article

Testing an Extended Knowledge-Capital Model of Foreign Direct Investment: The Role of Public Knowledge Inputs

by Henk L. M. Kox a, b,*
a
KVL Economic Policy Research, Hertogenbosch, The Netherlands
b
Department of Fiscal Economics, Tilburg University, Tilburg, The Netherlands
*
Author to whom correspondence should be addressed.
JIE  2024 2(4):41; https://doi.org/10.58567/jie02040005
Received: 26 March 2024 / Accepted: 11 November 2024 / Published Online: 15 January 2025
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Abstract

The knowledge-capital model explains outward foreign direct investment (FDI) of a country from its relative abundance of its knowledge assets. Early versions of the knowledge-capital theory model these assets as if they were only the results of knowledge investments by private firms. We extend the theory by a formal model of the public-private interaction in knowledge development. This sheds light on the role of the origin country of multinationals. The paper extracts four testable predictions from the model. We use the inter-country variation in national knowledge-creation systems and FDI performance to test the model using a new dataset; it holds knowledge-creation indicators for about 200 countries over the period 2000-2020. Based on a range of non-parametric tests, we can corroborate that the basic tenet of the knowledge-capital model is correct. Moreover, the results show the important role of public knowledge production for outward FDI.

Keywords: Knowledge-Capital Theory of FDI; Foreign Direct Investment; National Innovation Systems; Non-parametric Test;
Copyright: © 2025 by Kox. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

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ACS Style
Kox, H. L. M. Testing an Extended Knowledge-Capital Model of Foreign Direct Investment: The Role of Public Knowledge Inputs. Journal of Information Economics, 2024, 2, 41. https://doi.org/10.58567/jie02040005
AMA Style
Kox H L M. Testing an Extended Knowledge-Capital Model of Foreign Direct Investment: The Role of Public Knowledge Inputs. Journal of Information Economics; 2024, 2(4):41. https://doi.org/10.58567/jie02040005
Chicago/Turabian Style
Kox, Henk L. M. 2024. "Testing an Extended Knowledge-Capital Model of Foreign Direct Investment: The Role of Public Knowledge Inputs" Journal of Information Economics 2, no.4:41. https://doi.org/10.58567/jie02040005
APA style
Kox, H. L. M. (2024). Testing an Extended Knowledge-Capital Model of Foreign Direct Investment: The Role of Public Knowledge Inputs. Journal of Information Economics, 2(4), 41. https://doi.org/10.58567/jie02040005

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