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An assignment theory of foreign direct investment / Volker Nocke, Stephen Yeaple

Author
Nocke, Volker
Published
Cambridge, Mass. : National Bureau of Economic Research, 2004.
Physical Description
39 pages : illustrations ; 22 cm.
Additional Creators
Yeaple, Stephen R. (Stephen Ross) and National Bureau of Economic Research
Online Version

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Summary
"We develop an assignment theory to analyze the volume and composition of foreign direct investment (FDI). Firms conduct FDI by either engaging in greenfield investment or in cross-border acquisitions. Cross-border acquisitions involve firms trading heterogeneous corporate assets to exploit complementarities, while greenfield FDI involves building a new plant in the foreign market. In equilibrium, greenfield FDI and cross-border acquisitions co-exist, but the composition of FDI between these modes varies with firm and country characteristics. Firms engaging in greenfield investment are systematically more efficient than those engaging in cross-border acquisitions. Furthermore, most FDI takes the form of cross-border acquisitions when factor price differences between countries are small, while greenfield investment plays a more important role for FDI from high-wage into low-wage countries. These results capture important features of the data"--National Bureau of Economic Research web site.
Subject(s)
Note
"December 2004."
Bibliography Note
Includes bibliographical references (pages 37-39).
Other Forms
Also available in PDF from the NBER world wide web site (www.nber.org).
View MARC record | catkey: 2802348