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The existing literature on spatial interdependence in FDI flows has primarily focused on developed economies as hosts, with these hosts economically tied together via good infrastructure and historically strong/significant trade flows. In contrast, we explicitly test for the presence of spatial interdependence in developing hosts (Africa, Latin American and the Caribbean) where such ties are not as strong. For US outbound FDI between 1995 and 2007, our empirical results confirm third-country effects do matter even when controlling for spatial and time-period fixed effects. Based on the signs of the market potential and spatial lag coefficients, we find US FDI strategies into these regions as consistent with complex vertical specialisation. [ABSTRACT FROM AUTHOR]