Arbeitspapier
Greenfield foreign direct investment: Social learning drives persistence
This paper argues that the persistence of greenfield foreign direct investment (FDI) comes from information frictions. First, our simple social learning model shows that, through signaling effects, information frictions generate persistent greenfield FDI inflows. Second, we show empirically that the autoregressive coefficient of greenfield FDI increases in value with different proxies for information frictions, including six institutional and governance indicators and two common language measures. We also find that greenfield FDI persistence varies across industries. In particular, greenfield FDI by service firms is more persistent than that by manufacturing firms. Finally, our findings suggest that better governance, predictability, and transparency reduce information frictions and thereby avoiding drastic and persistent ups and downs in FDI.
- Language
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Englisch
- Bibliographic citation
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Series: ISER Discussion Paper ; No. 1171
- Classification
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Wirtschaft
Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
Multinational Firms; International Business
Firm Behavior: Theory
Firm Behavior: Empirical Analysis
- Subject
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Greenfield FDI
persistence
information
social learning
- Event
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Geistige Schöpfung
- (who)
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Ng, Joe Cho Yiu
Chan, Chao Hung
Tsang, Kwok Ping
Leung, Charles Ka Yui
- Event
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Veröffentlichung
- (who)
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Osaka University, Institute of Social and Economic Research (ISER)
- (where)
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Osaka
- (when)
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2022
- Handle
- Last update
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10.03.2025, 11:45 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Ng, Joe Cho Yiu
- Chan, Chao Hung
- Tsang, Kwok Ping
- Leung, Charles Ka Yui
- Osaka University, Institute of Social and Economic Research (ISER)
Time of origin
- 2022