Responses of FDI to geopolitical risks: The role of governance, information, and technology

Adrien Bussy and Huanhuan Zheng

International Business Review, 2023, vol. 32, issue 4

Abstract: We show that rising geopolitical risk and geopolitical uncertainty (GPR) deter foreign direct investment (FDI). We further explore the role of governance, information, and technology in shaping the responses of FDI to GPR and document three main findings. First, effective governance in the destination market safeguards FDI against GPR. Second, multinational corporations with better information gained from closer geographic, cultural, and commercial ties choose to delay FDI in response to rising GPR instead of managing it. Third, FDI in more R&D-intensive industries is more resilient to GPR because intangible technology can more easily be transferred across borders.

Keywords: Geopolitical risk; Geopolitical uncertainty; FDI; Governance; Policy; Tie; Technology; Information (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (9)

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DOI: 10.1016/j.ibusrev.2023.102136

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