A Mean-Variance Explanation of FDI Flows to Developing Countries
Research output: Working paper › Research
Documents
- PDF
Final published version, 208 KB, PDF document
An important feature of the world economy is the close global and regional integration due to strong trade and investment relations among countries. The high degree of integration between countries is likely to give rise to business cycle synchronisation in which case shocks will spillover from one country to another. This will have implications for the way investors evaluate the return and risk of investing abroad. This paper utilises a simple mean-variance optimisation framework where global and regonal factors capture the interdependence between countries. The model implies that FDI is driven by the risk-adjusted rate of return as well as global and regional spillovers. The preditions of the model are con…rmed in a sample of 60 countries over the period 1970-2000.
Original language | English |
---|---|
Publisher | Department of Economics, University of Copenhagen |
Number of pages | 19 |
Publication status | Published - 2008 |
- Faculty of Social Sciences - foreign direct investment, risk, portfolio, business cycles
Research areas
Number of downloads are based on statistics from Google Scholar and www.ku.dk
No data available
ID: 5520419