International Acquisitions: Host and Home Country Explanatory Characteristics

To better understand what place-specific attributes are most important to foreign direct investors, we consider the pattern of international foreign acquisitions, for the year 1993, from a simultaneous home and host country perspective. It is shown that the world's most prominent buyer and target countries are few in number. Furthermore, with the use of a stepwise-like Poisson regression procedure, we determine that both home and host country conditions are important in explaining the spatial pattern of low-tech and high-tech international acquisitions.
Specifically, international high-tech and low-tech acquisitions are best described by country-specific variables measuring trade, investment risk assessment, patents and tourism and that low-tech acquisitions are also linked with a country's domestic economic strength and government efficiency and stability. The outliers from the Poisson regression equations provide evidence that, in particular, the United States and Canada as well as, other countries geographically adjacent are disproportionately active in this type of foreign direct investment.