FDI Flow Volatility and ASEAN Members: An Exploratory Approach
The volatility of Foreign Direct Investment (FDI) flows, particularly those into ASEAN countries is well known. Still researchers will continue to use regression approaches to analyze this volatility. This paper is strictly an exploratory approach to analyzing the behavior of FDI itself and no attempt is made to design a regression model. Our approach is probabilistic in that we treat the FDI flows from home or source country to various members of ASEAN as random independent events over the time period 1999-2003. We then show how closely the random plots of FDI fit two common cumulative distribution functions (CDF), the Gumbel and the Weibull. Our approach also involves using international ISIC two-digit industry sectors from 15 to 37, from manufacture of food products and beverages to recycling. The essential thesis is that if capital markets are in a general equilibrium across hosts, home, industrial sectors, and time, then the return on capital (the marginal efficiency of capital) is equalized everywhere, and an home investor’s dollar will be randomly allocated across hosts, industrial sectors, and time. The reverse of this thesis is if FDI inflows fit a CDF, then that suggests by implication, that capital markets are in a general equilibrium.
|Date of creation:||2009|
|Date of revision:|
|Contact details of provider:|| Postal: 1645 E. Central Campus Dr. Front, Salt Lake City, UT 84112-9300|
Phone: (801) 581-7481
Fax: (801) 585-5649
Web page: http://economics.utah.edu
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.:
- Sylvia Gottschalk & Stephen Hall, 2008. "Foreign direct investment and exchange rate uncertainty in South-East Asia," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 13(4), pages 349-359.
- Benoit Mandelbrot, 1963. "The Variation of Certain Speculative Prices," The Journal of Business, University of Chicago Press, vol. 36, pages 394.
- Cheong, David & Plummer, Michael, 2009.
"FDI Effects of ASEAN Integration,"
26004, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:uta:papers:2009_06. 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: ()
If references are entirely missing, you can add them using this form.