Publication Type
Journal Article
Version
submittedVersion
Publication Date
3-2012
Abstract
This paper incorporates risk into the FDI decisions of firms. The risk of FDI failure increases with the gap between the South's technology frontier and the technology complexity of a firm's product. This leads to a double-crossing sorting pattern of FDI—firms of intermediate technology levels are more likely than others to undertake FDI. It is with the attempt to relax the upper bound of the technology content of FDI, we argue, that many FDI policies are created. The theory's predictions are consistent with the empirical patterns of FDI in China by US and Taiwanese manufacturing firms.
Keywords
Foreign direct investment, Technology, Risk, Spillover, Dynamic
Discipline
International Economics
Research Areas
International Economics
Publication
Journal of International Economics
Volume
86
Issue
2
First Page
306
Last Page
317
ISSN
0022-1996
Identifier
10.1016/j.jinteco.2011.09.001
Publisher
Elsevier
Citation
CHANG, Pao Li and LU, Chia-Hui.
Risk and the Technology Content of FDI: A Dynamic Model. (2012). Journal of International Economics. 86, (2), 306-317.
Available at: https://ink.library.smu.edu.sg/soe_research/1441
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.jinteco.2011.09.001