Direct investment in the United States by foreign government-owned companies, 1974-1981.

Mode of access: Internet.

Capital markets and the market structure of foreign investments

Contrary to the long-received theory of FDI, interest rates or rates of return can motivate foreign direct investment (FDI) in concert with the benefits of direct ownership. Thus, access to investor capital and capital markets is a vital component of the multinational’s competitive market structure. Moreover, multinationals can use their superior financial capacity as a competitive advantage in exploiting FDI opportunities in dynamic markets. They can also mitigate higher levels of foreign business risks under dynamic conditions by shifting more financial risk to creditors in the host economy. Furthermore, the investor’s expectation of foreign business risk necessarily commands a risk premium for exposing their equity to foreign market risk. Multinationals can modify the profit maximization strategy of their foreign subsidiaries to maximize growth or profits to generate this risk premium. In this context, we investigate how foreign subsidiaries manage their capital funding, business risk, and profit strategies with a diverse sample of 8,000 matched parents and foreign subsidiary accounts from multiple industries in 38 countries.We find that interest rates, asset prices, and expectations in capital markets have a significant effect on the capital movements of foreign subsidiaries. We also find that foreign subsidiaries mitigate their exposure to foreign business risk by modifying their capital structure and debt maturity. Further, we show how the operating strategy of foreign subsidiaries affects their preference for growth or profit maximization. We further show that superior shareholder value, which is a vital link for access to capital for funding foreign expansion in open market economies, is achieved through maintaining stability in the rate of growth and good asset utilization.

External Location Factors of Finnish Direct Investment in Central and Eastern European Transitional Economies

Tutkimuksen päätavoitteena oli selvittää suomalaisten suorien investointien maan valintaan vaikuttavia tekijöitä Itä- ja Keski-Euroopan kymmenessä siirtymätaloudessa. Empiirisessä osuudessa tarkasteltiin suomalaisten yritysten tärkeimpiä sijaintitekijöitä alueella ja yrityskohtaisten tekijöiden vaikutusta sijaintitekijöihin. Tutkimuksessa selvitettiin myös yritysten päämotiiveja investoida maihin. Laaditun investointikriteeristön mukaan maat pystyttiin laittamaan paremmuusjärjestykseen suomalaisen investoijan kannalta. Empiirisen osuuden aineisto kerättiin postikyselylomakkeella yrityksiltä, joilla on tai jotka ovat suunnittelemassa investointeja näihin maihin. Tutkimusote oli kvantitatiivinen. Tutkimustulokset osoittavat, että suomalaiset investoijat valitsevat Itä- ja Keski-Euroopan maan investointikohteeksi pääasiassa markkinapotentiaalin ja edullisten kustannusten perusteella. Myös infrastruktuuri vaikuttaa maan valintaan. Eri aloilla toimivien yritysten sijaintitekijöiden painotuksissa havaittiin eroja. Yrityksen koko ja päämotiivi vaikuttivat sijaintitekijöiden painotuksiin. Investointikriteereiden mukaan kaksi parasta investointimaata suomalaisille investoijille ovat Puola ja Viro. Vertailtaessa investointikriteereitä toteutuneisiin investointeihin voidaan todeta, että suomalaiset investoijat eivät ole hyödyntäneet investoinneilla saatavia etuja kaikissa kohdemaissa.

The impact of the direct foreign investment in Colombia

La inversión extranjera directa en Colombia es un asunto que particularmente desde 1990 ha venido tomando fuerza y que a su vez genera múltiples cuestiones. Para abordar el impacto que la IED ha tenido en Colombia se hace necesario hacer un acercamiento teórico para comprender el concepto, pasando por el estudio del caso latinoamericano para después seleccionar los principales sectores de la economía colombiana y en los cuales la IED ha jugado un rol destacado, como es el caso del sector financiero, la industria manufacturera, el sector de electricidad, gas y agua, el sector de transporte, almacenamiento y comunicaciones y el sector petróleo. Con ello en mente será posible establecer y medir el impacto económico de la IED, tomando como principal indicador la correlación entre la IED y PIB por sector y otros aspectos como el impacto en el empleo y la transferencia de conocimiento y tecnología. Igualmente es necesario abordar la perspectiva del inversionista y los riesgos y beneficios que corre al invertir en Colombia, esto permitirá ampliar el campo de análisis y establecer otras relaciones e impactos conexos de la IED en los aspectos sociales y culturales del país. Gracias a estos análisis será posible emitir un juicio de valor sustentado en un análisis científico detallado sobre el verdadero impacto de la IED y extendiéndose más allá del campo económico.

The impact of outward investments on parent company's employment and skill composition

This paper investigates the impact of outward foreign direct investment (FDI) by Italian multinationals on their total employment and skill composition. Specifically, by comparing data on 108 Italian manufacturing firms that became multinational (for the first time) in the period 1998–2004 with a counterfactual group of 2500 national firms that remained national in the same period, we provide descriptive and econometric evidence that the internationalisation of production activities did not reduce domestic employment in the parent companies neither for investments in developed or developing countries. As far as the skill composition is concerned, results reveal that only firms investing in Central and Eastern European countries experience some skill upgrading relative to firms that remained national.

Foreign Investment in Latin America and the Caribbean 2001

Includes bibliography

Equity, foreign investment and international competitiveness

Includes bibliography

Did Japanese direct investment in Korea suppress indigenous industrialization in the 1930s? : evidence from country-level factory entry patterns

Foreign direct investment (FDI) can deliver both positive and negative spillovers to the local economy. Negative effects such as crowding-out or entry-barrier effects might outweigh the positive ones when the technological gap between foreign and local firms is significant. This paper examines the impact of Japanese direct investment into Korea under colonization in the 1930s on the entry of Korean-owned factories. By using the census of manufacturing factories in Korea, we exploit variations in the share of Japanese factories and their entry rates across counties within the same subsectors. We find that within a subsector, entry rates of Korean factories were higher in counties with higher presence and entry of Japanese factories. Positive correlations are also found between subsectors. The results imply that Japanese direct investment did not suppress the entry of Korean factories and that FDI could exert positive entry spillovers on indigenous firms, even at a very early stage of industrialization.

Tőkebefektetések Magyarországon = Capital investments in Hungary

A tanulmány megvizsgálja Magyarország integrációs kapcsolatainak alakulását a tőkebefektetések területén, feltárja annak pozitív és negatív hatásait. Az 1990-től 2010-ig tartó periódust három fő szakaszban elemzi, ezek a szakaszok: a rendszerváltás ideje, az EU csatlakozásig, valamint a csatlakozás óta eltelt évek. Kitér a tanulmány arra, hogy a hét évvel ezelőtti uniós csatlakozás hogyan hatott a tőkebefektetések alakulására, az integráció előtti kapcsolatok milyen mértékben maradtak fent, illetve változtak, mennyire vagyunk nyitottak a külföldi tőke előtt és a 2008-ban kezdődő gazdasági világválság milyen hatással volt ezekre a folyamatokra. / === / The purpose of the study is to examine the standing of Hungary's relations within the integration especially focusing on foreign direct investment, as well as to explore its positive and negative consequences. The period between 1990 and 2010 will be discussed in three main parts, namely as the time of the political transformation, the time preceding Hungary's accession to the European Union, and that of the years passed since then. Apart from the above mentioned it is also necessary to analyze the impact made by the integration which took place seven years ago on the state of foreign direct investment, and, to have a look at the relations formed prior to it, to see the extent to which they have altered or remained the same. We need to know how much our economy is open to foreign capital and we have to understand the measure Hungary has been affected by, since the crisis that began in 2008 has made itself plausible.

Theory of foreign portfolio investment

This dissertation examines one category of international capital flows, private portfolio investments (private refers to the source of capital). There is an overall lack of a coherent and consistent definition of foreign portfolio investment. We clarify these definitional issues.^ Two main questions that pertain to private foreign portfolio investments (FPI) are explored. The first problem is the phenomenon of home preference, often referred to as home bias. Related to this are the observed cross-investment flows between countries that seem to contradict the textbook rendition of private FPI. A description of the theories purporting to resolve the home preference puzzle (and the cross-investment one) are summarized and evaluated. Most of this literature considers investors from major developed countries. I consider--as well--whether investors in less developed countries have home preference.^ The dissertation shows that home preference is indeed pervasive and profound across countries, in both developed and emerging markets. For the U.S., I examine home bias in both equity and bond holdings as well. I find that home bias is greater when we look at equity and bond holdings than equity holdings solely.^ In this dissertation a model is developed to explain home bias. This model is original and fills a gap in the literature as there have been no satisfactory models that handle at the same time both home preference and cross-border holdings in the context of information asymmetries. This model reflects what we see in the data and permits us to reach certain results by the use of comparative statics methods. The model suggests, counter-intuitively, that as the rate of return in a country relative to the world rate of return increases, home preference decreases. In the context of our relatively simple model we ascribe this result to the higher variance of the now higher return for home assets. We also find, this time as intended, that as risk aversion increases, investors diversify further so that home preference decreases.^ The second question that the dissertation deals with is the volatility of private foreign portfolio investment. Countries that are recipients of these flows have been wary of such flows because of their perceived volatility. Often the contrast is made with the perceived absence of volatility in foreign direct investment flows. I analyze the validity of these concerns using first net flow data and then gross flow data. The results show that FPI is not, in relative terms, more volatile than other flows in our sample of eight countries (half were developed countries and the rest were emerging markets).^ The implication therefore is that restricting FPI flows may be harmful in the sense that private capital may not be allocated efficiently worldwide to the detriment of capital poor economies. More to the point, any such restrictions would in fact be misguided. ^

Incorporating demand-side aspects into regional policy: variations in the importance of private investment decision factors across regions

Most regional programs focus on the supply side of regions, emphasizing the attraction conditions offered, such as infrastructure, labor skills, tax incentives, etc. This study analyzes one aspect of the demand side, that is, how investment decisions of private firms are made by asking the question: ""Do corporations decide the same way on investments in different parts of the territory?"" The paper analyzes the investments of 373 large Brazilian firms during 1996-2004. Based on the investment decisions of these firms, the role of sales, cash-flow, external financing, and working capital is investigated through regression analysis. The regional influence is captured by explanatory variables representing regional and firm characteristics, and by interaction dummies between the region and the main investment determinants. The results indicate significant differences across regions in the importance of investment determinants. This information is important for regional development policy, because different mechanisms should be used in different regions to foster private investments.

A estruturação dos determinantes relevantes no processo de decisão do investimento direto estrangeiro em Portugal e em Espanha

Dissertação de Mestrado apresentada ao Instituto de Contabilidade e Administração do Porto para a obtenção do grau de Mestre em Contabilidade e Finanças, sob orientação do Dr. Luís Pereira Gomes

Oil, foreign aid and FDI flows: The missing link?

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Economics from the NOVA – School of Business and Economics

The trading relationship between the EU and Mercosur: the mediatory role of Brazil

Dissertação de mestrado em European and Transglobal Business Law

Foreign acquisition and internal organization

NIPE WP 05/2016