Arbeitspapier
Foreign direct investment and exchange rates: A case study of US FDI in emerging market countries
This paper investigates the impact of exchange rates on US Foreign Direct Investment (FDI) inflows to a sample of 16 emerging market countries using panel data for the period 1990-2002. Three variables are used to capture separate exchange rate effects. The nominal bilateral exchange rate to the $US captures the value of the local currency (a higher value implies a cheaper currency and attracts FDI). Changes in the real effective exchange rate index (REER) proxy for expected changes in the exchange rate: an increasing (decreasing) REER is interpreted as devaluation (appreciation) being expected, so that FDI is postponed (encouraged). The temporary component of bilateral exchange rates is a proxy for volatility of local currency, which discourages FDI. The results support the ‘Chakrabarti and Scholnick’ hypothesis that, ceteris paribus, there is a negative relationship between the expectation of local currency depreciation and FDI inflows. Cheaper local currency (devaluation) attracts FDI while volatile exchange rates discourage FDI.
- Sprache
-
Englisch
- Erschienen in
-
Series: Discussion papers in economics ; No. 2006,05
- Klassifikation
-
Wirtschaft
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Udomkerdmongkol, Manop
Görg, Holger
Morrissey, Oliver
- Ereignis
-
Veröffentlichung
- (wer)
-
University of Nottingham, School of Economics
- (wo)
-
Nottingham
- (wann)
-
2006
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:41 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Udomkerdmongkol, Manop
- Görg, Holger
- Morrissey, Oliver
- University of Nottingham, School of Economics
Entstanden
- 2006
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