Risk and the technology content of FDI : A dynamic model

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

10 Scopus Citations
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Author(s)

  • Pao-Li Chang
  • Chia-Hui Lu

Related Research Unit(s)

Detail(s)

Original languageEnglish
Pages (from-to)306-317
Journal / PublicationJournal of International Economics
Volume86
Issue number2
Publication statusPublished - Mar 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. © 2011 Elsevier B.V..

Research Area(s)

  • Dynamic, Foreign direct investment, Risk, Spillover, Technology

Citation Format(s)

Risk and the technology content of FDI: A dynamic model. / Chang, Pao-Li; Lu, Chia-Hui.
In: Journal of International Economics, Vol. 86, No. 2, 03.2012, p. 306-317.

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review