Foreign direct investment and macroeconomic risk

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Main author: Jinjarak, Yothin
Format: Journal Article           
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id eprints-8630
recordtype eprints
institution SOAS, University of London
collection SOAS Research Online
language English
language_search English
description Motivated by the macroeconomic fluctuations and policy regime switches frequently observed in developing countries, this paper provides cross country-industry evidence on the links between a host country's macro risks and foreign direct investment (FDI) activities. For each industry I measure vertical FDI share as a ratio of exports to a parent country relative to local sales by foreign affiliates. Using a panel sample from 1989 to 1999, 1 find that FDI activities of US multinationals in industries with higher share of vertical FDI respond disproportionately more to negative effects of macro-level demand, supply, and sovereign risks. However, when institutional quality and total FDI share of the host country are sufficiently low, the merits of cross-industry vertical versus horizontal FDI in response to macro risks disappear.
format Journal Article
author Jinjarak, Yothin
author_facet Jinjarak, Yothin
authorStr Jinjarak, Yothin
author_letter Jinjarak, Yothin
title Foreign direct investment and macroeconomic risk
publisher Elsevier
publishDate 2007
url https://eprints.soas.ac.uk/8630/

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