Foreign Direct Investment in Emerging Markets: Income, Repatriations and Financial Vulnerabillities

Alexander Lehmann

No 2002/047, IMF Working Papers from International Monetary Fund

Abstract: Based on U.S. data, the returns on foreign direct investment in emerging markets are shown to be substantially higher than would be suggested by official balance of payments statistics. This paper identifies the determinants of FDI profitability in 43 industrialized and developing countries. After financial leverage and the effect of tax minimizing income transfers are controlled for, host country risk and market openness are found to raise affiliate returns on equity and returns on sales. In the context of a number of financial crises during the 1990s, income repatriations are shown to be pro-cyclical, though the effect of host country recessions is mitigated through continued spending on fixed capital and a re-direction of affiliate sales towards export markets.

Keywords: WP; return on equity; investor; earnings; Profitability of Foreign Direct Investment; Cashflows in Multinational Corporations; FDI income; FDI inflow; host country FDI statistics; FDI flow; foreign direct investment enterprise; parent company; B. FDI; FDI share; FDI transactions; Foreign direct investment; Personal income; Emerging and frontier financial markets; Wages; Stocks; Asia and Pacific; North America; Africa (search for similar items in EconPapers)
Pages: 31
Date: 2002-03-01
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=15690 (application/pdf)

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:imf:imfwpa:2002/047

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().