English
Ciência-IUL
Publicações
Descrição Detalhada da Publicação
The timing and probability of FDI: an application to US multinational enterprises
Título Revista
Applied Economics
Ano (publicação definitiva)
2005
Língua
Inglês
País
Reino Unido
Mais Informação
Web of Science®
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Abstract/Resumo
An 'option-pricing' model is employed to analyse the timing of FDI. Assuming that the firm's profits are determined by the attractiveness of both the home and foreign countries, and that attractiveness follows a Brownian motion, an optimal trigger value of FDI is derived. The model shows that, contrary to the NPV rule, FDI entry should be delayed the greater the uncertainty of attractiveness in both locations. Another important result is that MNEs do not regard FDI as a risk-diversification tool. The results of the model were then tested empirically with US FDI data, using labour costs as a proxy for (the reciprocal of) attractiveness. The results support the findings of the analytical model.
Agradecimentos/Acknowledgements
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Palavras-chave
Classificação Fields of Science and Technology
- Economia e Gestão - Ciências Sociais
