| 来源类型 | Working Paper
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| 规范类型 | 报告
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| DOI | 10.3386/w8631
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| 来源ID | Working Paper 8631
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| The Merits of Horizontal versus Vertical FDI in the Presence of Uncertainty |
| Joshua Aizenman; Nancy Marion
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| 发表日期 | 2001-12-01
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| 出版年 | 2001
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| 语种 | 英语
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| 摘要 | This paper examines the impact of uncertainty on the profitability of vertical and horizontal foreign direct investment (FDI). Vertical FDI takes place when the multinational fragments the production process internationally, locating each stage of production in the country where it can be done at the least cost. Horizontal FDI occurs when the multinational undertakes the same production activities in multiple countries. We consider a model where the risk-neutral multinational must commit its investment prior to the realization of shocks. The multinational has monopoly power and confronts two types of risk. It may face random productivity shocks or encounter a host country that tries to confiscate its rents. We show that greater uncertainty reduces the expected income from vertical FDI but increases the expected income from horizontal FDI. In addition, predatory actions by the host country are more costly to the multinational that has structured its production vertically rather than horizontally. Consequently, increased uncertainty should encourage horizontal FDI but discourage vertical FDI. If vertical FDI is more likely to flow into emerging markets and horizontal FDI into mature markets, then the empirical finding that most FDI is horizontal rather than vertical might be due, in part, to the greater uncertainty associated with emerging markets. We report cross-country regression results that provide some support for the predictions of the model. Volatility appears to have a differential impact on FDI inflows into mature and emerging markets. For mature markets that supposedly attract mainly horizontal FDI, greater volatility significantly increases FDI inflows. For emerging markets that receive relatively more vertical FDI inflows, increased volatility does not increase FDI inflows. |
| 主题 | International Economics
; International Factor Mobility
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| URL | https://www.nber.org/papers/w8631
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| 来源智库 | National Bureau of Economic Research (United States)
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| 引用统计 |
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| 资源类型 | 智库出版物
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| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/566237
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推荐引用方式
GB/T 7714 |
Joshua Aizenman,Nancy Marion. The Merits of Horizontal versus Vertical FDI in the Presence of Uncertainty. 2001.
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文件名：
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w8631.pdf
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格式：
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Adobe PDF
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