Download or read book The Impact of Exchange Rate Volatility on U S Foreign Direct Investment in Latin America written by Callye R. M. Masten and published by ProQuest. This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The determinants of foreign direct investment (FDI) have been widely examined. Previous studies have shown that exchange rates play a vital role in the analysis and are a major determinant in the flow of FDI. Most research has focused on examining how exchange rate volatility affects the economies of developed nations. However, little research has been done in understanding the impact of exchange rate volatility on FDI flows to Latin America. Developing countries lack the capital that is needed for further growth. Therefore, FDI is important to developing countries, because it allows them to gain the necessary capital. This paper examines the relationship between exchange rate volatility, political institutions and FDI flows into Latin America across two sectors: food processing, and industrial manufacturing. Empirical results show that exchange rate volatility significantly deters the flow of U.S. FDI into Latin America. Other significant economic factors are U.S. interest rates and openness to trade. Conflict and corruption are the political risk factors that have significant impacts on FDI flows. Conclusions from the paper recommend governments in Latin America to implement macroeconomic polices that promote stability, which could help reduce exchange rate volatility and lower inflation.
Download or read book Exchange Rate Volatility and FDI Inflows written by Marek Hanusch and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a panel of 80 developing and developed countries for the period 1990-2015, this studyanalyses the relationship between exchange rate volatility and foreign direct investment (FDI)inflows. The results reveal a negative relationship between de facto exchange rate volatility andFDI. Reducing exchange rate volatility by 10 percent over one-year can boost FDI inflows-ceterisparibus-by an estimated 0.48 percentage points of GDP while the same reduction over the pastfive years can boost FDI inflows by 0.27 percentage points over the long-run. The results areapplied to the case of South Africa, which has been experiencing high volatility of the rand inrecent years. Reducing the rand's volatility to that of developing country peers, South Africa could boost FDI inflows by a potential of 0.25 percentage points of GDP.
Download or read book Exchange Rate Flexibility Volatility and the Patterns of Domestic and Foreign Direct Investment written by Mr.Joshua Aizenman and published by International Monetary Fund. This book was released on 1992-03 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the factors determining the impact of exchange rate regimes on the behavior of domestic investment and foreign direct investment (FDI). Producers may diversify internationally in order to increase the flexibility of production. We characterize the possible equilibria in a macro model that allows for the presence of a short-run Phillips curve. It is shown that a fixed exchange rate regime is more conducive to FDI relative to a flexible exchange rate, and this conclusion applies for both real and nominal shocks. If the dominant shocks are nominal (real) we will observe a negative (a positive) correlation between exchange rate volatility and the level of investment.
Download or read book Trade and Investment Performance Under Floating Exchange Rates written by International Monetary Fund and published by International Monetary Fund. This book was released on 1988-05-03 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Contrary to the arguments of several scholars, we have failed to find either a conclusive theoretical case or clear empirical evidence of an effect, harmful or otherwise, of exchange rate variability (as measured by either short-term volatility or long-run misalignment) on overall levels of international trade. In this paper, after reviewing the theories and evidence on this issue, we go on to consider the impact of exchange rate variability on direct foreign investment. We summarize and amplify upon the scant theoretical literature of this issue, and proceed to test U.S. data for the presence of such an impact. We find none.
Download or read book Exchange Rate Volatility and Export Oriented FDI written by Hisham S. Foad and published by . This book was released on 2005 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: No clear consensus exists in the existing literature on the effects of exchange rate volatility on Foreign Direct Investment (FDI). A survey of past studies on this topic yields negative, positive, and indeterminate effects. Furthermore, the impact of currency risk appears to vary across both time and location. One possible explanation for these conflicting results is that they ignore the importance of export oriented FDI. A multinational's foreign affiliate is likely to operate in both the host country and local export markets. This tendency is magnified when considering FDI within a customs union such as the EU. Ignoring local export markets creates an omitted variable bias, which could overestimate or underestimate the effects of exchange rate volatility on FDI. Using detailed data on the operations of foreign affiliates of US multinationals across seventeen European countries from 1983 - 2002, we approach this issue in two stages. In the first stage, we obtain a measure of exports from foreign affiliates that is filtered from bilateral exchange rate volatility between the host and local export markets. This export series is then included in a dynamic panel with US to host market exchange rate volatility and a host of other FDI determinants to explain inflows of FDI from the US to European countries. Potential endogeneity issues are addressed using a GMM procedure suggested by Arellano and Bond (1991). We find that the ability to export has a positive and significant effect on inflows of FDI, estimating that a 1% increase in exports as a share of total affiliate sales is associated with a $96 million increase in FDI inflows. Once foreign affiliate exports have been accounted for, we find that exchange rate volatility between the US and the host country has a significantly negative effect on the level of FDI, but an insignificant effect on inflows. Additionally, it appears that there are some unobserved features of membership in the European Monetary Union that have a significantly positive effect on inflows. Finally, we run a counterfactual experiment in which we assume that the UK had adopted the euro in 1999. Re-estimating the trade and FDI relations, we estimate that by not joining the EMU, the UK has "lost" approximately $12 billion worth of FDI from the US. While not a large loss (less that 0.1% of UK GDP), it does imply that with regard to FDI from the US, the formation of the EMU has benefited the euro-zone countries at the expense of those outside the EMU.
Download or read book Foreign Direct Investment Trade and Exchange Rate Volatility written by Bedassa Tadesse and published by LAP Lambert Academic Publishing. This book was released on 2009-10 with total page 172 pages. Available in PDF, EPUB and Kindle. Book excerpt: The desire of firms' to enhance their global presence, diversify their production and the interest of policymakers to augment domestic production with more efficient foreign technology has contributed to a surge in the cross border flow of capital. By taking into account market characteristics such as market maturity and export platform status of Japanese FDI hosts during the 1990s, this dissertation examines the link between FDI, trade and exchange rate volatility. More specifically, the following questions are addressed: What induces multinational firms to reach diverse destinations? Which of the host country characteristics attract investing firms most? Are trade flows among partners related to the volume of FDI flows between them? What does the geographical distribution of FDI reflect: efficiency, technological advances, or liberalization of trade and FDI policies? Given the diminishing role of the traditional FDI driving factors (such as factor abundance and cheap labor), to what extent do market maturity, export platform status and size of the host nations matter in determining the inflow of FDI?
Download or read book The Impact of Exchange Rate Volatility on Export and FDI Inflows written by Aklilu Gebrehiwot and published by . This book was released on 2018 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Foreign Direct Investment Exchange Rate Variability and Demand Uncertainity written by Linda S. Goldberg and published by . This book was released on 1994 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Impact of Exchange Rate Volatility on Foreign Direct Investment FDI in BRIC Countries written by Danqing Wang and published by . This book was released on 2013 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Do Exchange Rate and Its Volatility Deter Foreign Direct Investment FDI to India written by Durairaj Kumarasamy and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the impact of exchange rate levels and its volatility on Foreign Direct Investment in India using quarterly data for the period 1996:2 to 2010:1. The study employed autoregressive distributed lag (ARDL) bounds testing approach to examine the long-run and short-run relationship. Both conditional variance and other measures of volatility have been used to generate exchange rate volatility. The study also considered factors that motivate the foreign investors' decision to invest in India. The results indicated that exchange rate volatility deters FDI in India, suggesting that flexible but stable exchange rate system may be needed to successfully attract FDI inflows in India.
Download or read book The Impact of G 3 Exchange Rate Volatility on Developing Countries written by Gerardo Esquivel and published by . This book was released on 2002 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Concerns the impact of instability of the dollar, yen and deutsche mark on developing countries' exports, foreign direct investment, and exchange rate crises.
Download or read book Proposed Strategy for a Regional Exchange Rate Arrangement in Post crisis East Asia written by Masahiro Kawai and published by World Bank Publications. This book was released on 2000 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: A coordinated action by East Asian countries to stabilize their currencies against a common basket of major currencies (broadly representative of their average structure of trade and foreign direct investment) would help stabilize both intraregional exchange rates and effective exchange rates, in a way consistent with the medium-term objective of promoting trade investment and growth in the region.
Download or read book Exchange Rate Flexibility Volatility and the Patterns of Domestic and Foreign Direct Investment written by Joshua Aizenman and published by . This book was released on 2006 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the factors determining the impact of exchange rate regimes on the behavior of domestic investment and foreign direct investment (FDI). Producers may diversify internationally in order to increase the flexibility of production. We characterize the possible equilibria in a macro model that allows for the presence of a short-run Phillips curve. It is shown that a fixed exchange rate regime is more conducive to FDI relative to a flexible exchange rate, and this conclusion applies for both real and nominal shocks. If the dominant shocks are nominal (real) we will observe a negative (a positive) correlation between exchange rate volatility and the level of investment.
Download or read book Exchange Rate Volatility and the Timing of Foreign Direct Investment written by Chia-Ching Lin and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the impact of exchange rate uncertainty on the timing of foreign direct investment (FDI) with heterogeneous investing motives. We first extend Dixit-Pindyck's real options model to show that while an increase in exchange rate volatility tends to delay FDI of a market-seeking firm, it might accelerate FDI of an export-substituting firm if the firm's degree of risk aversion is high enough. The rationale behind this finding is that a market-seeking FDI might increase the exposure of the firm's profits to exchange rate risk, while an export-substituting FDI might reduce it. Empirical evidence from a survival analysis based on firm-level data on the entry by Taiwanese firms into China over the period between 1987 and 2002 is consistent with the theory. These results reveal that the relationship between exchange rate uncertainty and FDI is crucially dependent on the motives of the investing firms.
Download or read book The Effect of Exchange Rate Volatility and FDI Flows on Bilateral Trade written by 李凱彥 and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Exchange Rate Volatility and Inward Foreign Direct Investment in Greece written by Nicholas Apergis and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The goal of this paper is to examine the impact of exchnage rate uncertainty on foreign direct investment (FDI) flows from European Union (EU) countries (the source countries) into Greece (the host country). Measuring exchange rate uncertainty through the ARCH methodology, the empirical results show that exchange rate uncertainty exerts a negative impact on FDI inflows from EU countries, implying the negative profit exposure of FDI investors as well as the absence of sophisticated capital markets in Greece.
Download or read book 2017 Impact Estimation Of Exchange Rate On Foreign Direct Investment Inflows And Annual Update Of Competitiveness Analysis For 34 Greater China Economies written by Khee Giap Tan and published by World Scientific. This book was released on 2018-11-30 with total page 309 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is the fifth annual project of the Asia Competitiveness Institute studying competitiveness at the sub-national level of Greater China. ACI's flagship competitiveness study adopts a comprehensive framework to measure competitiveness by incorporating 102 indicators under four environments and 11 sub-environments. By undertaking the study at the sub-national level, it accounts for the considerable disparities within a large economy like Greater China. The study's unique methodology incorporates comparative strengths and weaknesses, and what-if policy simulations aimed at policy suggestions for each sub-national economy and region.A new feature of this competitiveness study introduces the concept of Shapley value for the assignment of weights to the various indicators that constitute competitiveness. This methodological innovation not only adds an element of objectivity in terms of the assignment of weights, but also validates the robustness of results obtained from the competitiveness studies over the past years.Moreover, the empirical research featured in this book attempts to understand the drivers of FDI inflows to Mainland China, with a specific focus on exchange rate movements and volatility. Nowadays with the international flows of goods and capital becoming ubiquitous and comprising an important aspect of national competitiveness, the role of exchange rate is drawing much more policy attention. In view of this, the research findings presented in this book make an important academic and policy contribution by empirically examining the relationship between FDI inflows and exchange rate.Finally, the timing of this publication makes it indispensable to include the interpretation and reconciliation of policy development of China after the 19th National Congress of the Communist Party of China held in October 2017. With the growing prosperity of its people and the improvement of its international status, China would 'realise the Chinese Dream of national rejuvenation and see the people realise their aspirations for a better life.' As such, China has achieved the transformation from regaining dignity to becoming prosperous and growing strong to be a great modern socialist country visualised by President Xi Jinping. This book attempts to investigate the vision of 'growing strong to be a great modern socialist country' from different aspects.
