Abstract
The correlation between real exchange rates and foreign direct investment (FDI) has encouraged researchers to examine possible macroeconomic motivations for FDI. Previous research has provided empirical support for the exchange rate influencing FDI through its effect on relative wages (Cushman, 1985, 1987; Culem, 1988) and through its effect on relative wealth (Froot and Stein, 1989; Klein and Rosengren 1990). Klein and Rosengren (1990) find evidence that relative wealth rather than relative ages seems to best explain FDI into the United States. If relative wealth is an important determinant of FDI we should find evidence in both inward and outward FDI. This paper tests the relative wage and the relative wealth hypothesis on outward FDI data and concludes that as with inward FDI, there is greater support for the relative wealth hypothesis.
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References
CULEM, C.G. (1988) The Locational Determinants of Direct Investments Among Industrialized Countries, European Economic Review, 32, 885–904.
CUSHMAN, D.O. (1985) Real Exchange Rate Risk, Expectations, and the Level of Direct Investment, Review of Economics and Statistics, 297–308.
CUSHMAN, D.O. (1987) The Effect of Real Wages and Labor Productivity on Foreign Direct Investment, Southern Economic Journal, 174–185.
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KLEIN, M.W. and ROSENGREN, E. (1990) Determinants of Foreign Direct Investment in the United States, Clark University Working Paper 90 - 3.
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© 1992 Springer-Verlag Berlin · Heidelberg
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Klein, M.W., Rosengren, E. (1992). Foreign Direct Investment Outflow from the United States: An Empirical Assessment. In: Klein, M.W., Welfens, P.J.J. (eds) Multinationals in the New Europe and Global Trade. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-76991-7_6
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DOI: https://doi.org/10.1007/978-3-642-76991-7_6
Publisher Name: Springer, Berlin, Heidelberg
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