Risks and Foreign Direct Investment An Empirical Study Based on the U.S. Dataset
Foreign direct investment is now perceived as a classic form of business across the world. By transferring foreign capitals, technologies or managerial expertise, FDI has the potential to be a catalyst of host countries’ economic development. Meanwhile, foreign firms and their home countries could also benefit from FDI by enjoying profits, low-cost products, etc. As the result, there is no wonder why FDI has been increasingly recognized as a win-win choice of both home and host countries. However, in making or attracting overseas investment, foreign firms and host countries both face a same issue:how to minimize risks. Indeed, various risks, such as political, economic, exchange rate and legal risks, all may affect the direction of FDI because its adverse impact on firms’ profitability. By using panel data estimation based on the dataset of flows of U.S. FDI to 43 developing countries during the period of 1984 to 2007, the empirical results of this paper statistically confirmed the negative relationship between risk and flows of FDI.
NETL
NSTL
万方数据
