Foreign Direct Investment Outflows in Business-Cycle Fluctuations

33 Pages Posted: 1 May 2003

See all articles by Miao Wang

Miao Wang

Marquette University - Department of Economics

M. C. Sunny Wong

Hobby School of Public Affairs, U of Houston

Date Written: May 9, 2005

Abstract

This paper investigates business-cycle affects for a country's FDI outflows. OLS and panel regressions show that volatility in economic growth has a negative and significant impact on FDI outflows. Furthermore, we find different types of shocks have asymmetric impacts on FDI outflows. In other words, fluctuations of the same magnitude in a boom and a recession have different effects on FDI outflows. This relationship is more evident in OECD countries. We also include exchange rate volatility, lagged business-cycle measure, and control for potential endogeneity problem as robustness checks. Our findings are robust across different specifications.

Keywords: Foreign Direct Investments, FDI, Business Cycles, Volatility, Determinants, Economic Growth

JEL Classification: E32, F21, F23

Suggested Citation

Wang, Miao and Wong, M. C. Sunny, Foreign Direct Investment Outflows in Business-Cycle Fluctuations (May 9, 2005). Available at SSRN: https://ssrn.com/abstract=384543 or http://dx.doi.org/10.2139/ssrn.384543

Miao Wang

Marquette University - Department of Economics ( email )

P.O. Box 1881
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M. C. Sunny Wong (Contact Author)

Hobby School of Public Affairs, U of Houston ( email )

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