Exchange Rate and Political Risks, Again
AbstractWe examine the effects of exchange rate and political risks on foreign direct investment (FDI) for multinationals. Our strategy is to examine FDI by U.S. firms at two levels: in all industries and on the subset of only firms in manufacturing industries. When investing in developed economies the firms appear to take past and present variation in exchange rates into consideration. When investing in less developed nations the past and present variation does not appear to weigh as heavily as the present and future variation. Decreasing political risk increases FDI.
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Bibliographic InfoPaper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number 200903.
Length: 20 pages
Date of creation: 27 Apr 2009
Date of revision:
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Exchange Rates; Foreign Direct Investment; Uncertainty;
Other versions of this item:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F31 - International Economics - - International Finance - - - Foreign Exchange
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-27 (All new papers)
- NEP-IFN-2009-11-27 (International Finance)
- NEP-POL-2009-11-27 (Positive Political Economics)
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