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Locational determinants of the US direct foreign investment in food and kindred products


  • Yulin Ning

    (Department of Agricultural Economics at the University of Kentucky)

  • Michael R. Reed

    (Department of Agricultural Economics at the University of Kentucky)


This article investigates locational determinants of US direct foreign investment (DFI) in food and kindred products by using data from six industrialized countries from 1983 to 1989. Separate equations were fitted to explain DFI position, outflow, and reinvestment. Cultural linkages, trading blocs, host market size, tax considerations, exchange differentials, and host market growth rates are found to be significant determinants of DFI in food manufacturing. Wage rate differentials were found to be important in the position and reinvested equations, but not in the outflow equation. Thus, cheap labor may not be as important in attracting DFI as in the past. © 1995 by John Wiley & Sons, Inc.

Suggested Citation

  • Yulin Ning & Michael R. Reed, 1995. "Locational determinants of the US direct foreign investment in food and kindred products," Agribusiness, John Wiley & Sons, Ltd., vol. 11(1), pages 77-85.
  • Handle: RePEc:wly:agribz:v:11:y:1995:i:1:p:77-85 DOI: 10.1002/1520-6297(199501/02)11:1<77::AID-AGR2720110108>3.0.CO;2-0

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    References listed on IDEAS

    1. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 411-432, September.
    2. Reed, Michael R. & Marchant, Mary A., 1992. "The Global Competitiveness Of The U.S. Food-Processing Industry," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 21(1), April.
    3. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, Oxford University Press, vol. 80(2), pages 190-207.
    4. Tsai, Pan-Long, 1991. "Determinants of foreign direct investment in Taiwan: An alternative approach with time-series data," World Development, Elsevier, vol. 19(2-3), pages 275-285.
    5. repec:mes:jeciss:v:22:y:1988:i:2:p:477-484 is not listed on IDEAS
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    Cited by:

    1. Husam Rjoub & Mehmet Aga & Ahmad Abu Alrub & Murad Bein, 2017. "Financial Reforms and Determinants of FDI: Evidence from Landlocked Countries in Sub-Saharan Africa," Economies, MDPI, Open Access Journal, vol. 5(1), pages 1-12, January.
    2. Ajaero, Victor & Van der Sluis, Evert, 2016. "Foreign Direct Investment and Trade in the U.S. Food Processing Industry: Complements or Substitutes?," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 236697, Agricultural and Applied Economics Association.
    3. Mattson, Jeremy W. & Koo, Won W., 2002. "U.S. Processed Food Exports And Foreign Direct Investment In The Western Hemisphere," Agribusiness & Applied Economics Report 23547, North Dakota State University, Department of Agribusiness and Applied Economics.
    4. repec:kap:iaecre:v:3:y:1997:i:3:p:312-324 is not listed on IDEAS
    5. Ravichandran Munirathinam & Mary Marchant & Michael Reed, 1997. "The Canada U.S. free trade agreement: Competitive tradeoffs between foreign direct investment and trade," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 3(3), pages 312-324, August.
    6. Pooran Lall & David Norman & Allen Featherstone, 2003. "Determinants of US direct foreign investment in the Caribbean," Applied Economics, Taylor & Francis Journals, vol. 35(13), pages 1485-1496.
    7. John Anyanwu, 2011. "Working Paper 136 - Determinants of Foreign Direct Investment Inflows to Africa, 1980-2007," Working Paper Series 327, African Development Bank.
    8. Phillips, Shauna & Ahmadi-Esfahani, Fredoun Z., . "Exchange Rates and Foreign Direct Investment: Theoretical Models and Empirical Evidence," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society.

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