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Foreign direct investment, political conflict and co‐operation: The asymmetric response hypothesis
Author(s) -
Nigh Douglas,
Schollhammer Hans
Publication year - 1987
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.4090080407
Subject(s) - multinational corporation , politics , foreign direct investment , economics , investment (military) , asymmetry , monetary economics , political science , macroeconomics , finance , law , physics , quantum mechanics
Previous empirical research has demonstrated that political factors do affect the foreign direct investment decisions of multinational enterprises. This study explores the nature of this relationship in more depth. Specifically, it examines the extent to which investors response to political conflict and co‐operation is asymmetric, i.e. investors respond differently depending on whether the political conflict or cooperation is increasing or decreasing. The asymmetric response hypothesis is tested through regression analysis of pooled time‐series (13 years) and cross‐sectional (62 countries) data on Japanese investors. The study finds evidence of asymmetry for intra‐nation conflict and co‐operation but not for inter‐nation conflict and co‐operation.