Behavioural Determinants Of Foreign Direct Investment
AbstractThe paper presents a behavioural economics approach to foreign direct investment. Starting from behavioural finance theory, it uses content analysis from interviews made to Portuguese managers with investments abroad. The study presents evidence of herding, anchoring, overconfidence, mental accounting and other behaviour rules in firms’ location decisions that originate a set of determinants of FDI flows and complement the neoclassical paradigm. Moreover, it confirms the Heiner model (1983, 1985, 1989) by showing that the higher the uncertainty faced by decision makers the more frequent will be the use of behavioural rules. The central role of uncertainty helps explain why FDI flows occur more frequently among developed countries.
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Bibliographic InfoPaper provided by Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação in its series GEE Papers with number 0008.
Length: 41 pages
Date of creation: Dec 2008
Date of revision: Dec 2008
Foreign Direct Investment; Behavioural economics; Uncertainty.;
Other versions of this item:
- Pinheiro-Alves, Ricardo, 2008. "Behavioural determinants of Foreign Direct Investment," MPRA Paper 10297, University Library of Munich, Germany.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
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