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The sensitivity of U.S. multinational enterprises to political and macroeconomic uncertainty: A sectoral analysis

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  • Desbordes, Rodolphe

Abstract

This paper confronts two alternative approaches for explaining U.S. foreign direct investment (FDI) pattern in developing countries. According to the real options (RO) approach, FDI in capital-intensive industries should be particularly deterred by political and macroeconomic uncertainty. On the other hand, the supply chain risk management (SCRM) approach puts forward that multinational enterprises in vertically integrated industries are unlikely to locate their foreign activities in risky countries. Thanks to the use of sectoral data, it is demonstrated that the SCRM approach explains much better the pattern of U.S. FDI in developing countries than the RO approach.

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Bibliographic Info

Article provided by Elsevier in its journal International Business Review.

Volume (Year): 16 (2007)
Issue (Month): 6 (December)
Pages: 732-750

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Handle: RePEc:eee:iburev:v:16:y:2007:i:6:p:732-750

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Keywords: Country risk FDI Multinational enterprises Uncertainty;

References

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Citations

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Cited by:
  1. Wu, Desheng & Olson, David L., 2008. "Supply chain risk, simulation, and vendor selection," International Journal of Production Economics, Elsevier, vol. 114(2), pages 646-655, August.
  2. Zwinkels, Remco C.J. & Beugelsdijk, Sjoerd, 2010. "Gravity equations: Workhorse or Trojan horse in explaining trade and FDI patterns across time and space?," International Business Review, Elsevier, vol. 19(1), pages 102-115, February.
  3. Celine Azemar & Julia Darby & Rodolphe Desbordes & Ian Wooton, 2012. "Market familiarity and the location of South and North MNEs," Working Papers 2012_05, Business School - Economics, University of Glasgow.
  4. Darby, Julia & Desbordes, Rodolphe & Wooton, Ian, 2009. "Does Public Governance Always Matter? How Experience of Poor Institutional Quality Influences FDI to the South," CEPR Discussion Papers 7533, C.E.P.R. Discussion Papers.
  5. Wang, Chengqi & Hong, Junjie & Kafouros, Mario & Boateng, Agyenim, 2012. "What drives outward FDI of Chinese firms? Testing the explanatory power of three theoretical frameworks," International Business Review, Elsevier, vol. 21(3), pages 425-438.
  6. Stoian, Carmen & Filippaios, Fragkiskos, 2008. "Dunning's eclectic paradigm: A holistic, yet context specific framework for analysing the determinants of outward FDI: Evidence from international Greek investments," International Business Review, Elsevier, vol. 17(3), pages 349-367, June.

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