Abstract:In contrast to the 19th and early 20th centuries, the effects of security factors on foreign direct investment (FDI) have received limited interest in the post-Cold War era. Using panel data for 126 developing countries between 1966 and 2002, and controlling for macroeconomic conditions, economic reforms, and level of democratization, this essay tests the effects of ''follow the flag'' variables on U.S. FDI. Security factors can affect FDI in two stages: the initial decision over whether to invest and the seco… Show more
“…19 Because the BEA suppresses country data for some years (e.g., when a single U.S. firm is the main investor in a country and thus the release of data would provide rival firms with useful information), we follow Rosecrance and Thompson (2003) and consider these data missing. 20 See Biglaiser and DeRouen (2007), Jensen (2003, Li (2006), and Li and Resnick (2003) that use similar control variables in their FDI work.…”
Section: Independent Variables In Fdi Outcome Equationmentioning
confidence: 98%
“…Although increased trade based on the growth of exports and imports is not a perfect proxy for trade reform, it is often used in the literature (Biglaiser and DeRouen 2007;Jensen 2003Jensen , 2006Li and Resnick 2003). We also test the KOF Globalization Index as a proxy for trade reform.…”
Section: Independent Variables In Fdi Outcome Equationmentioning
“…19 Because the BEA suppresses country data for some years (e.g., when a single U.S. firm is the main investor in a country and thus the release of data would provide rival firms with useful information), we follow Rosecrance and Thompson (2003) and consider these data missing. 20 See Biglaiser and DeRouen (2007), Jensen (2003, Li (2006), and Li and Resnick (2003) that use similar control variables in their FDI work.…”
Section: Independent Variables In Fdi Outcome Equationmentioning
confidence: 98%
“…Although increased trade based on the growth of exports and imports is not a perfect proxy for trade reform, it is often used in the literature (Biglaiser and DeRouen 2007;Jensen 2003Jensen , 2006Li and Resnick 2003). We also test the KOF Globalization Index as a proxy for trade reform.…”
Section: Independent Variables In Fdi Outcome Equationmentioning
“…Empirical support for this mechanism was recently provided by Biglaiser and DeRouen (2007), who also used Kane (2004) data and concluded, "[the] novel result is the positive effect of US troops in attracting US capital inflows." Interestingly, they found a higher FDI inflow from U.S. firms, but not other nations' firms.…”
“…Findlay & O'Rourke, 2007;Berger, et al, 2013); and firms respond to political factors in their trade and FDI decisions (e.g. Biglaiser & DeRouen, 2007;Li & Vashchilko, 2010). Recent financial crisis sweeping western world has in some ways made state ownership of enterprises less exceptional (Pargendler, 2012).…”
Expropriation risk has a binding effect on foreign direct investment (FDI). However, state-owned multinational corporation (MNCs) may counter the monopoly power of the host state by leveraging the political influence of their home government. The magnitude of this counter force, we argue, may vary, depending on the strength of political relations between the home and host state, and the level of economic dependence of the host country on the home market. We find supporting evidence of our hypotheses using Chinese firm level FDI information between 2003 and 2010.
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