Exchange Rates and Outward Foreign Direct Investment: US FDI in Emerging Economies
Abstract
This paper investigates the effect of exchange rates on US foreign direct investment (FDI) flows to a sample of 16 emerging market countries using annual panel data for the period 1990-2002. Three separate exchange rate effects are considered: the value of the local currency (a cheaper currency attracts FDI); expected changes in the exchange rate (expected devaluation implies FDI is postponed); and exchange rate volatility (discourages FDI). The results reveal a negative relationship between FDI and more expensive local currency, the expectation of local currency depreciation, and volatile exchange rates. Stable exchange rate management can be important in attracting FDI. Copyright � 2009 Blackwell Publishing Ltd.Download Info
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Bibliographic Info
Article provided by Wiley Blackwell in its journal Review of Development Economics.
Volume (Year): 13 (2009)
Issue (Month): 4 (November)
Pages: 754-764
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1363-6669
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Antonakakis, Nikolaos & Tondl, Gabriele, 2012.
"Do determinants of FDI to developing countries differ among OECD investors? Insights from Bayesian model averaging,"
Discussion Papers
1/12, Europa-Kolleg Hamburg, Institute for European Integration.
- Nikolaos Antonakakis & Gabriele Tondl, 2011. "Do determinants of FDI to developing countries differ among OECD investors? Insights from Bayesian Model Averaging," FIW Working Paper series 076, FIW.
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