Exchange Rate and Political Risks, Again

Gregory Clare and Ira Gang

Departmental Working Papers from Rutgers University, Department of Economics

Abstract: We examine the effects of exchange rate and political risks on foreign direct investment (FDI) for multinationals. Our strategy is to examine FDI by U.S. firms at two levels: in all industries and on the subset of only firms in manufacturing industries. When investing in developed economies the firms appear to take past and present variation in exchange rates into consideration. When investing in less developed nations the past and present variation does not appear to weigh as heavily as the present and future variation. Decreasing political risk increases FDI.

Keywords: Exchange Rates; Foreign Direct Investment; Uncertainty (search for similar items in EconPapers)
JEL-codes: F21 F31 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2009-04-27
New Economics Papers: this item is included in nep-ifn and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Exchange Rate and Political Risks, Again (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:rut:rutres:200903

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