The Impact of Exchange Rate on FDI and the Interdependence of FDI over Time
The paper examines the impact of exchange rates on foreign direct investment (FDI) inflows into the United States in the context of a model that allows for the interdependence of FDI over time. Interdependence is modeled as a two-state Markov process where the two states can be interpreted as either a favorable or an unfavorable environment for FDI in an industry. Unbalanced industry-level panel data from the US wholesale trade sector are used in the analysis and yield two main results. First, the paper finds evidence that FDI is interdependent over time. Second, under a favorable FDI environment, the exchange rate has a positive and significant effect on the average rate of FDI inflows.
|Date of creation:||Jun 2009|
|Contact details of provider:|| Postal: P.O. Box 789, Manila|
Fax: (63-2) 636-2648
Web page: http://www.adb.org
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ris:adbewp:0164. 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: (Maria Susan M. Torres)
If references are entirely missing, you can add them using this form.