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The Determinants of US Outgoing FDI in the Food-Processing Sector

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  • Xun, Lei
  • Awokuse, Titus O.

Abstract

Global economic growth has led to an increase of FDI activity in the agro-food sector, which together with the increased FDI in the manufacturing sector, has generated increased FDI activity in food processing. This paper fills a gap in the literature on the role of FDI by extending the recent Knowledge-Capital (CMM) model of multinational enterprises to the food processing sector. Following the CMM model, this paper analyzed the determinants of US outgoing FDI in the food processing sector using data on developed countries over the period 1983 - 2002. The result suggests that economy size, factor endowment, home country trade cost and host country investment cost have significant effect on FDI activity in the food processing sector. Only weak empirical evidence was found for the effect of exchange rate, food price and corruption level.

Suggested Citation

  • Xun, Lei & Awokuse, Titus O., 2005. "The Determinants of US Outgoing FDI in the Food-Processing Sector," 2005 Annual meeting, July 24-27, Providence, RI 19131, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea05:19131
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