Are Countries with Capital-Intensive Sectors more Vulnerable for a decrease in FDI during the Financial Crisis of 2008?

Abstract Given that there are differences in industrial composition between countries and some sectors are more capital intensive than others, the purpose of this study is to analyze if capital intensity index of industrial composition could serve as an additional explanation to decrease in FDI across the states in the period of 2007-2011. In order to reflect the industrial composition, the author has developed a capital intensity index. The results lend support to a negative relationship between capital intensity index and FDI in the period of 2007-2011; however obtained coefficient is statistically insignificant. Nevertheless the results give a support for the idea that countries where the industrial composition mainly consists of capital intensive industry, on average, should experience a higher decrease in FDI during the crisis period if compared to countries where the industrial composition is less capital intensive.