The impact of exchange rate risk on the foreign direct investment of U.S. multinational manufacturing companies
This paper extends the examination of the effects of exchange rate risk on the foreign direct investment decision of U.S. multinationals in manufacturing. It does so by explicitly developing a model which incorporates exchange rate risk into the objective function of the firm and tests the model on cross-sectional data over the years 1974 to 1977 for investment in both developed and less developed countries. These are the only years for which data on all crucial variables are available. In all cases the risk aversity hypothesis was substantiated and the same model was appropriate for both developed and less developed countries. Copyright Kluwer Academic Publishers 1992
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Volume (Year): 3 (1992)
Issue (Month): 2 (June)
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References listed on IDEAS
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.:
- Farok J Contractor, 1984. "Choosing Between Direct Investment and Licensing: Theoretical Considerations and Empirical Tests," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 15(3), pages 167-188, September.
- Lall, Sanjaya, 1980. "Monopolistic Advantages and Foreign Involvement by U.S. Manufacturing Industry," Oxford Economic Papers, Oxford University Press, vol. 32(1), pages 102-122, March.
- Culem, Claudy G., 1988. "The locational determinants of direct investments among industrialized countries," European Economic Review, Elsevier, vol. 32(4), pages 885-904, April.
- Ray, Edward John, 1977. "Foreign Direct Investment in Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 283-297, April.
- Root, Franklin R & Ahmed, Ahmed A, 1979. "Empirical Determinants of Manufacturing Direct Foreign Investment in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 27(4), pages 751-767, July.
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