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http://dspace.mediu.edu.my:8181/xmlui/handle/10419/3831| Title: | Foreign direct investment and exchange rates: A case study of US FDI in emerging market countries |
| Keywords: | ddc:330 |
| Issue Date: | 16-Oct-2013 |
| Publisher: | ISchool of Economics, Nottingham |
| Description: | This paper investigates the impact of exchange rates on US Foreign Direct Investment (FDI) inflows to a sample of 16 emerging market countries using panel data for the period 1990-2002. Three variables are used to capture separate exchange rate effects. The nominal bilateral exchange rate to the $US captures the value of the local currency (a higher value implies a cheaper currency and attracts FDI). Changes in the real effective exchange rate index (REER) proxy for expected changes in the exchange rate: an increasing (decreasing) REER is interpreted as devaluation (appreciation) being expected, so that FDI is postponed (encouraged). The temporary component of bilateral exchange rates is a proxy for volatility of local currency, which discourages FDI. The results support the ‘Chakrabarti and Scholnick’ hypothesis that, ceteris paribus, there is a negative relationship between the expectation of local currency depreciation and FDI inflows. Cheaper local currency (devaluation) attracts FDI while volatile exchange rates discourage FDI. |
| URI: | http://koha.mediu.edu.my:8181/xmlui/handle/10419/3831 |
| Other Identifiers: | Discussion papers in economics School of Economics, Nottingham 2006,05 http://hdl.handle.net/10419/3831 ppn:513783016 |
| Appears in Collections: | EconStor |
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