How Does Country Risk Matter for Foreign Direct Investment?
In this paper we empirically investigate the effects on inward FDI of various components of political and financial risk. We also examine the relationship between inward FDI and not only the level of these risks but also their changes over time. Two kinds of findings are noteworthy. One is that among the political and financial risks, only the political risk is associated with the FDI inflow. Specifically, the change in the level of political risk affects FDI inflows, while the initial level of political risk does not. The other is that, particularly in the case of developing countries, payment delays, contract expropriation, and corruption are negatively associated with the FDI inflow. However, significant improvement leads to increased FDI inflow, even if initial levels are high.
|Date of creation:||01 Feb 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.eria.org/
More information through EDIRC
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.:
- Ivar Kolstad & Espen Villanger, 2008. "Foreign Direct Investment in the Caribbean," Development Policy Review, Overseas Development Institute, vol. 26(1), pages 79-89, 01.
- R Blundell & Steven Bond, .
"Initial conditions and moment restrictions in dynamic panel data model,"
W14&104., Economics Group, Nuffield College, University of Oxford.
- Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
- Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- Bruce Blonigen, 2005.
"A Review of the Empirical Literature on FDI Determinants,"
Atlantic Economic Journal,
International Atlantic Economic Society, vol. 33(4), pages 383-403, December.
- Bruce A. Blonigen, 2005. "A Review of the Empirical Literature on FDI Determinants," NBER Working Papers 11299, National Bureau of Economic Research, Inc.
- Noorbakhsh, Farhad & Paloni, Alberto & Youssef, Ali, 2001. "Human Capital and FDI Inflows to Developing Countries: New Empirical Evidence," World Development, Elsevier, vol. 29(9), pages 1593-1610, September.
When requesting a correction, please mention this item's handle: RePEc:era:wpaper:dp-2012-03. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Hiroshi Okasaki)
If references are entirely missing, you can add them using this form.