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Title:Exchange rates and outward foreign direct investment: US FDI in emerging economies PDF Logo
Authors:Udomkerdmongkol, Manop
Morrissey, Oliver
Görg, Holger
Issue Date:2008
Series/Report no.:Research paper / UNU-WIDER 2008.102
Abstract:The paper investigates the impact of exchange rates on US foreign direct investment (FDI) flows to a sample of 16 emerging market countries using annual panel data for the period 1990-2002. Three separate exchange rate effects are considered: the value of the local currency (a cheaper currency attracts FDI); expected changes in the exchange rate (expected devaluation implies FDI is postponed); and exchange rate volatility (discourages FDI). The results reveal a negative relationship between FDI and more expensive local currency, the expectation of local currency depreciation, and volatile exchange rates. Stable exchange rate management can be important in attracting FDI.
Subjects:exchange rate
foreign exchange
Document Type:Working Paper
Appears in Collections:WIDER Research Papers, United Nations University (UNU)
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