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The Effect of Exchange Rate Risk on Foreign Direct Investments Implications for countries not adhering to EMU: Sweden as a specific example

Hermansson, Dag LU (2011) NEKM01 20102
Department of Economics
Abstract
This study describes an aggregate relationship between exchange rate risk and foreign direct investments. The relationship is conducted by panel data estimations, with variables derived from the OLI-framework and prior research. Sample data consists of 36 countries for the time series 1991-2009. Estimations are controlled for country specific variations by using fixed effects, regional dummy variable groupings or control variables. Time inconsistencies are also evaluated to show possible implications for the estimation results.

The results do not show consistency of the exchange rate effects on foreign direct investments. This is contradicting to theory, but in line with prior research. The study may thus explain why assessment of... (More)
This study describes an aggregate relationship between exchange rate risk and foreign direct investments. The relationship is conducted by panel data estimations, with variables derived from the OLI-framework and prior research. Sample data consists of 36 countries for the time series 1991-2009. Estimations are controlled for country specific variations by using fixed effects, regional dummy variable groupings or control variables. Time inconsistencies are also evaluated to show possible implications for the estimation results.

The results do not show consistency of the exchange rate effects on foreign direct investments. This is contradicting to theory, but in line with prior research. The study may thus explain why assessment of prior research gives such ambivalent results. To improve the accuracy of the conducted estimations of this study, more control for time specific differences are suggested. (Less)
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author
Hermansson, Dag LU
supervisor
organization
course
NEKM01 20102
year
type
H1 - Master's Degree (One Year)
subject
keywords
foreign direct investment, exchange rate risk, panel data
language
English
id
1775241
date added to LUP
2011-02-15 15:36:28
date last changed
2011-02-15 15:36:28
@misc{1775241,
  abstract     = {This study describes an aggregate relationship between exchange rate risk and foreign direct investments. The relationship is conducted by panel data estimations, with variables derived from the OLI-framework and prior research. Sample data consists of 36 countries for the time series 1991-2009. Estimations are controlled for country specific variations by using fixed effects, regional dummy variable groupings or control variables. Time inconsistencies are also evaluated to show possible implications for the estimation results.  

The results do not show consistency of the exchange rate effects on foreign direct investments. This is contradicting to theory, but in line with prior research. The study may thus explain why assessment of prior research gives such ambivalent results. To improve the accuracy of the conducted estimations of this study, more control for time specific differences are suggested.},
  author       = {Hermansson, Dag},
  keyword      = {foreign direct investment,exchange rate risk,panel data},
  language     = {eng},
  note         = {Student Paper},
  title        = {The Effect of Exchange Rate Risk on Foreign Direct Investments Implications for countries not adhering to EMU: Sweden as a specific example},
  year         = {2011},
}