The Foreign Direct Investment Financial Life Cycle: Evidence of Macroeconomic Effects from Transition Economies

Josef Brada and Vladimír Tomšík

Emerging Markets Finance and Trade, 2009, vol. 45, issue 3, 5-20

Abstract: The imputation of reinvested earnings from foreign direct investment (FDI) as a debit in the balance of payments exaggerates the current account deficit. This phenomenon is of major importance for transition economies because they received massive inflows of FDI in the late 1990s. We model the FDI financial life cycle to describe the evolution of profits, reinvested earnings, and repatriated dividends for an FDI project to show that this inflow of investment to transition economies has caused large distortions in their current account deficits. We verify the workings of the FDI financial life cycle and estimate its duration using a sample of eight transition economies.

Keywords: balance of payments; foreign direct investment; foreign exchange crisis; profit and dividend remittances; transition economies (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://mesharpe.metapress.com/link.asp?target=contribution&id=8704278640012H60 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:45:y:2009:i:3:p:5-20

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().