Publication Type
Working Paper
Version
publishedVersion
Publication Date
8-2011
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 pattern 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
First Page
1
Last Page
46
Publisher
SMU Economics and Statistics Working Paper Series, No. 07-2011
City or Country
Singapore
Citation
CHANG, Pao Li and LU, Chia-Hui.
Risk and the Technology Content of FDI: A Dynamic Model. (2011). 1-46.
Available at: https://ink.library.smu.edu.sg/soe_research/1298
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.
Comments
Published in Journal of International Economics 2012, https://doi.org/10.1016/j.jinteco.2011.09.001