Exchange Rate and Political Risks, Again
We examine the effects of exchange rate and political risks on foreign direct investment (FDI) for multinationals. Our strategy is to examine FDI by U.S. firms at two levels: in all industries and on the subset of only firms in manufacturing industries. When investing in developed economies the firms appear to take past and present variation in exchange rates into consideration. When investing in less developed nations the past and present variation does not appear to weigh as heavily as the present and future variation. Decreasing political risk increases FDI.
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- Gregory Clare & Ira N. Gang, 2009.
"Exchange Rate and Political Risks, Again,"
Departmental Working Papers
200903, Rutgers University, Department of Economics.
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- Gregory Clare & Ira N. Gang, 2010. "Exchange Rate and Political Risks, Again," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 46(3), pages 46-58, May.
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- Gregory Clare, 1992. "The impact of exchange rate risk on the foreign direct investment of U.S. multinational manufacturing companies," Open Economies Review, Springer, vol. 3(2), pages 143-163, June.
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