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Political events and the foreign direct investment decision: An empirical examination
Author(s) -
Nigh Douglas
Publication year - 1986
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090070205
Subject(s) - foreign direct investment , multinational corporation , politics , latin americans , economics , investment decisions , investment (military) , affect (linguistics) , market size , political risk , international economics , financial economics , macroeconomics , finance , political science , sociology , communication , production (economics) , law
This study investigates the impact of political events on US manufacturing direct investment in Latin America. The relationship between foreign direct investment and political events (and economic factors) is examined through regression analysis of pooled time‐series (21 years) and cross‐sectional (8 countries) data. In contrast to previous studies using an econometric approach, this study finds that political events do affect direct investment decisions. Specifically, both intra‐nation and inter‐nation conflict and co‐operation have an impact on US direct investment decisions concerning Latin American countries. In addition, the host country's market size and market growth affect these decisions by US multinational firms.