The exchange rate effects on different types of foreign direct investment

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dc.contributor.authorKim, Chang Yong, 1972-
dc.date.accessioned2011-06-09T23:16:48Z
dc.date.available2011-06-09T23:16:48Z
dc.date.issued2010-09
dc.descriptionxii, 132 p. : ill. A print copy of this thesis is available through the UO Libraries. Search the library catalog for the location and call number.en_US
dc.description.abstractMotivated by conflicting prior evidence for exchange rate effects on foreign direct investment (FDI), the first chapter of this dissertation explores theoretical evidence of the exchange rate effect on FDI in terms of different types of FDI. Based on a simple two-country model, I demonstrate that the profit function of a horizontal FDI investor is a decreasing function of the exchange rate, while the profit function for a vertical FDI investor is an increasing function of the exchange rate. This implies that a depreciation of a host country currency depresses horizontal FDI and promotes vertical FDI. Moreover, comparing the FDI investor's intertemporal profit in a simple two-period time frame, I lay out a theoretical basis for a relation between the effects of the exchange rate and the expectations of the exchange rate effect on different types of FDI. The second chapter of this dissertation examines the empirical evidence for the exchange rate effects on different types of FDI. Using cross-border mergers and acquisitions among 37 countries from 1985 to 2007, I measure horizontal and vertical FDI in 4 different ways, and constructing directional country pairs, I estimate the exchange rate effects on horizontal and vertical FDI by a Poisson and a negative binomial regression with fixed and random effects. The estimation results provide considerable support for the model's predictions of the first chapter. The third chapter of this dissertation extends the first and second chapters with an analysis of the effect of exchange rate expectations on different types of FDI. I examine 4 different measures of exchange rate expectations. Using a methodology similar to that in the second chapter, the estimation results suggest that the expected exchange rate effects on horizontal and vertical FDI are not very significant. However, the expectations of the exchange rate shed more light on the exchange rate effects on different types of FDI under all of the exchange rate expectation measures. This suggests that the exchange rate is a more influential determinant of the allocation of different types of FDI than the expected exchange rate.en_US
dc.description.sponsorshipCommittee in charge: Bruce Blonigen, Chairperson, Economics; Jeremy Piger, Member, Economics; Stephen Haynes, Member, Economics; Neviana Petkova, Outside Member, Financeen_US
dc.identifier.urihttps://hdl.handle.net/1794/11226
dc.language.isoen_USen_US
dc.publisherUniversity of Oregonen_US
dc.relation.ispartofseriesUniversity of Oregon theses, Dept. of Economics, Ph. D., 2010;
dc.subjectFDIen_US
dc.subjectExchange ratesen_US
dc.subjectHorizontal FDIen_US
dc.subjectExpected exchange rateen_US
dc.subjectForeign direct investmenten_US
dc.subjectVertical FDIen_US
dc.subjectEconomicsen_US
dc.subjectInvestments, Foreign
dc.subjectForeign exchange rates
dc.titleThe exchange rate effects on different types of foreign direct investmenten_US
dc.typeThesisen_US

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