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Multinational Enterprises and Tobin´s q: The Implications for Foreign Direct Investment

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  • Chionis, D.

Abstract

This paper constructs a theoretical model of investment decision abroad supporting the idea that the Multinational Enterprises’ internalization decision is influenced by the capital installation cost. This modification alters MNE’s investment behavior. Using the idea that capital mobility across countries is associated with the capital installation cost then the firm’s maximization problem may also incorporate the Tobin’s q in a modified fashion.

Suggested Citation

  • Chionis, D., 2004. "Multinational Enterprises and Tobin´s q: The Implications for Foreign Direct Investment," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 1(2), pages 121-130.
  • Handle: RePEc:eaa:ijaeqs:v:1:y2004:i:1_12
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    File URL: http://www.usc.es/economet/reviews/ijaeqs126.pdf
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    References listed on IDEAS

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    1. Brainard, S Lael, 1997. "An Empirical Assessment of the Proximity-Concentration Trade-off between Multinational Sales and Trade," American Economic Review, American Economic Association, vol. 87(4), pages 520-544, September.
    2. James R. Markusen & Keith E. Maskus, 2001. "Multinational Firms: Reconciling Theory and Evidence," NBER Chapters,in: Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey, pages 71-98 National Bureau of Economic Research, Inc.
    3. Anderton, Robert & Hijzen, Alexander & De Santis, Roberto A., 2004. "On the determinants of euro area FDI to the United States: the knowledge- capital-Tobin's Q framework," Working Paper Series 329, European Central Bank.
    4. Markusen, James R & Maskus, Keith E, 2002. "Discriminating among Alternative Theories of the Multinational Enterprise," Review of International Economics, Wiley Blackwell, vol. 10(4), pages 694-707, November.
    5. Sivadasan Jagadeesh, 2009. "Barriers to Competition and Productivity: Evidence from India," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-66, September.
    6. Salvador Barrios & Holger Görg & Eric Strobl, 2003. "Multinational Enterprises and New Trade Theory: Evidence for the Convergence Hypothesis," Open Economies Review, Springer, vol. 14(4), pages 397-418, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Multinational Enterprises; Foreign Direct Investment; Tobin’s q.;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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