U.S. FOREIGN DIRECT INVESTMENT IN FOOD PROCESSING INDUSTRIES OF LATIN AMERICAN COUNTRIES: A DYNAMIC APPROACH

Anatoliy Skripnitchenko and Won W. Koo

No 23533, Agribusiness & Applied Economics Report from North Dakota State University, Department of Agribusiness and Applied Economics

Abstract: In this report, we apply a dynamic cost minimization model of U.S. foreign direct investment in food processing industries to nine Latin American countries. Estimation of the first order condition (Euler equation) using a consistent rational expectation assumption showed that dynamic structure explains the investment process in food processing industries quite well. U.S. food processors in Latin America are driven by the host country?s level of demand and by labor cost considerations. They can adjust their investment position quickly. We also quantified short and long-run effects of shocks to exogenous variables on foreign direct investment position.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 16
Date: 2005
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:nddaae:23533

DOI: 10.22004/ag.econ.23533

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