44
Gourdon
Notes 1. The following discussion is based on World Bank (2007a). 2. Following Cadot, Carrère, and Strauss-Kahn (forthcoming), we define the intensive margin as including products that have been exported by a country for at least two years and the extensive margin as including products that were not exported by the country in the preceding two years but were exported in each of the following two years and products that were not exported to a particular market in the preceding two years but were exported to that market in the following two years. 3. The Inward FDI Potential Index captures several factors (apart from market size) that are expected to affect the attractiveness of an economy to foreign investors. It is an average of the values (normalized to yield a score between zero, for the lowest-scoring country, and one, for the highest) of the following 12 variables (no weights are attached in the absence of a priori reasons to select particular weights): GDP per capita; the rate of GDP growth; the share of exports in GDP; the average number of telephone lines and mobile per 1,000 inhabitants; commercial energy use per capita; the share of R&D spending in GDP; the share of tertiary students in the population; a measure of country risk; the world market share in exports of natural resources; the world market share of imports of parts and components for automobiles and electronic products; the world market share of exports of services; the share of world FDI inward stock; and a broad indicator of the attractiveness and absorptive capacity for FDI and the investment climate. 4. The index is based on a bilateral distances matrix from the French Center for International Economic Studies (CEPII). 5. Depending on the outcome variable, “Spec” can be a Herfindahl, Theil, or Gini index.
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