Foreign Direct Investments During Financial Crises
AbstractThe fundamental idea of International capital flows is that short-term flows can be easily reversed, while flows on a longer time horizon are more stable. Crises are associated with withdrawals of short-term capital flows and growth of the foreign direct investment flows. The current crisis has meant a major decline of international capital flows, also of the foreign direct investment. The analysis in this article tries to establish if and under which conditions foreign direct investments can bring greater stability during the crisis, comparing the evolution of foreign direct investments in the current crisis with their response in previous crises. We show that during previous crises foreign direct investments were stable, behaving differently from other types of capital. Yet, during the current crisis, foreign direct investments have proven to be not so stable and all the components declined, raising questions about the resumption of the positive trend. The stability of foreign direct investments in the past was given by the increase of mergers and acquisitions during the crisis, reflecting fire-sale FDI. This feature is not found in the current crisis as mergers and acquisitions were severe affected by the crises and recorded a major decline. The current paper is realized in the doctoral program entitled "PhD in economics at the standards of European knowledge- DoEsEc", scientific coordinator Prof. PhD Rodica Zaharia, institution The Academy of Economic Studies Bucharest, Faculty of International Business, period of research 2009-2012.
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Bibliographic InfoArticle provided by University of Oradea, Faculty of Economics in its journal The Annals of the University of Oradea. Economic Sciences.
Volume (Year): 1 (2011)
Issue (Month): 2 (December)
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More information through EDIRC
foreign direct investment; financial crisis; fire-sale FDI; international capital flows; Asian crisis;
Find related papers by JEL classification:
- F30 - International Economics - - International Finance - - - General
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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