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Does Lockdown Bring Shutdown? Impact of the COVID-19 Pandemic on Foreign Direct Investment

Yingjie Fu, Antonio Alleyne () and Yifei Mu

Emerging Markets Finance and Trade, 2021, vol. 57, issue 10, 2792-2811

Abstract: This article investigates how the COVID-19 pandemic affected home and host countries’ FDI margins. Heckman estimation of monthly bilateral FDI data indicates the following: (1) The pandemic reduced both the FDI margins. (2) COVID-19 mortality in home countries reduced extensive FDI margin. (3) FDI was more sensitive to host countries’ pandemic situation for both OECD and emerging countries; moreover, in emerging countries, FDI was affected by its domestic pandemic control because they were typically the host countries. (4) The service sector’s FDI was severely affected by the pandemic than other sectors’ FDI.

Date: 2021
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DOI: 10.1080/1540496X.2020.1865150

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Handle: RePEc:mes:emfitr:v:57:y:2021:i:10:p:2792-2811