The types of foreign direct investment and their relationship to distance

The papers´ main interest consists of the significance of distance related to Foreign direct investment flows (FDI) for the period of 2002 to 2012. Precisely, it will analyse if there exists a relevance in the method of FDI, either Brownfield or Greenfield, used and their relation to distance and which are the main determinants that render those outflows. Furthermore, this paper provides a solution on how to deal with negative outflows, namely disinvestments and method to approximate bilateral Greenfield and Brownfield flows. The method used to test the connotation of distance to FDI is a gravity equation set, one of the most robust and most stable models in economic theory to approximate this relation. The general findings consist of a higher sensibility in the affiliation for Greenfield FDI flows to distance than for Brownfield FDIs and an additional set of key determinants or the investment strategies used.