An Assignment Theory of Foreign Direct Investment

Content Provider	Semantic Scholar
Author	Nocke, Volker Yeaple, Stephen
Copyright Year	2004
Abstract	We develop an assignment theory to analyze the volume and composition of foreign direct investment (FDI). Firms conduct FDI by either engaging in greenfield investment or in cross-border acquisitions. Cross-border acquisitions involve firms trading heterogeneous corporate assets to exploit complementarities, while greenfield FDI involves building a new plant in the foreign market. In equilibrium, greenfield FDI and cross-border acquisitions co-exist, but the composition of FDI between these modes varies with firm and country characteristics. Firms engaging in greenfield investment are systematically more efficient than those engaging in cross-border acquisitions. Furthermore, most FDI takes the form of cross-border acquisitions when factor price differences between countries are small, while greenfield investment plays a more important role for FDI from high-wage into low-wage countries. These results capture important features of the data. JEL Codes: F12, F14, F23, L11.
File Format	PDF HTM / HTML
Alternate Webpage(s)	http://repec.org/sed2005/up.21111.1105462460.pdf
Alternate Webpage(s)	http://users.econ.umn.edu/~holmes/class/2008f8601/NockeYeaple2.pdf
Alternate Webpage(s)	http://www.princeton.edu/~ies/fall04/YeaplePaper.pdf
Alternate Webpage(s)	http://www.rieb.kobe-u.ac.jp/academic/international/trade-ic04/pdf/Yeaple.pdf
Language	English
Access Restriction	Open
Subject Keyword	Complementarity theory Eye foreign bodies Fault detection and isolation Genetic Heterogeneity
Content Type	Text
Resource Type	Article