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Publications & Research :: Policy Research Working Paper

Surges and Stops in FDI Flows to Developing Countries : Does the Mode of Entry Make a Difference?

ACCOUNTING ANNUAL GROWTH ARBITRAGEURS ASSETS BALANCE SHEET BANK POLICY BOND CAPITAL ACCOUNT CAPITAL ACCOUNT OPENNESS CAPITAL CONTROLS CAPITAL FLOW CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKET CAPITAL TRANSACTIONS CENTRAL BANK CONTROL VARIABLES CORPORATE ASSETS COUNTRY LEVEL COUNTRY RISK COUNTRY SIZE CREDIT MARKET CREDIT MARKETS CROSS-BORDER CAPITAL CROSS-BORDER MERGERS CUMULATIVE DISTRIBUTION CUMULATIVE DISTRIBUTION FUNCTION CURRENCY CURRENCY CRISES CURRENT ACCOUNT DEBT SERVICE DEMOCRACY DEPENDENT VARIABLE DESCRIPTIVE STATISTICS DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING ECONOMIES DEVELOPING WORLD DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DIVERSIFICATION DOMESTIC MARKETS DUMMY VARIABLE DUMMY VARIABLES ECONOMIC CONDITIONS ECONOMIC DEVELOPMENTS ECONOMIC GEOGRAPHY ECONOMIC GROWTH ECONOMIC INTEGRATION ECONOMIC LAW ECONOMIC RISK ECONOMIC STABILITY ECONOMIC STUDIES ECONOMIC SYSTEMS EMERGING ECONOMIES EMERGING MARKET EMERGING MARKETS EMPIRICAL EVIDENCE EMPIRICAL LITERATURE EMPIRICAL MODELS EQUITY CAPITAL ESTIMATION STRATEGIES ESTIMATION TECHNIQUES EXCHANGE RATE EXCHANGE RATE STABILITY EXPLANATORY VARIABLES EXPORTS EXPOSURE EXTERNAL FINANCING FINANCIAL CAPITAL FINANCIAL CRISES FINANCIAL FLOW FINANCIAL FLOWS FINANCIAL INSTABILITY FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL OPENNESS FINANCIAL RISK FINANCIAL SECTOR FINANCIAL STABILITY FINANCIAL STUDIES FIRM ASSETS FOREIGN CAPITAL FOREIGN DEBT FOREIGN DEBT SERVICE FOREIGN DIRECT INVESTMENT FOREIGN DIRECT INVESTMENTS FOREIGN FIRMS FOREIGN INVESTORS FOREIGN MARKET FOREIGN OWNERSHIP GDP GDP PER CAPITA GLOBAL ECONOMY GLOBAL FINANCIAL MARKETS GLOBAL LEVEL GLOBAL LIQUIDITY GLOBAL MARKETS GLOBAL RISK GOVERNMENT INTERVENTIONS GOVERNMENT POLICIES GROWTH RATE GROWTH RATES HOST COUNTRIES HOST COUNTRY HOST ECONOMIES HUMAN CAPITAL IMPORT IMPORTS INCOME INCOME LEVEL INCOME LEVELS INCOMES INDEPENDENT VARIABLES INFLATION INFLATION RATE INFLOWS OF CAPITAL INTEREST RATE INTERNATIONAL BANK INTERNATIONAL BUSINESS INTERNATIONAL ECONOMICS INTERNATIONAL FINANCE INTERNATIONAL FINANCIAL STATISTICS INTERNATIONAL MONEY INTERNATIONAL STANDARDS INTERNATIONAL TRADE INTERNATIONAL TRANSACTIONS INVESTING INVESTMENT INFLOWS JOINT VENTURES LEADING INDICATORS LEVERAGE LIQUIDITY CRISES LOCAL CURRENCY LONG-TERM BOND YIELDS LONG-TERM CAPITAL LOW-INCOME COUNTRIES LOW-INCOME ECONOMIES MACROECONOMIC EFFECTS MACROECONOMIC ENVIRONMENTS MACROECONOMIC MANAGEMENT MACROECONOMIC UNCERTAINTY MACROECONOMIC VOLATILITY MACROECONOMICS MARKET COMPETITION MARKET ENTRY MARKET POWER MARKET STRUCTURE MARKET VALUATIONS MEAN VALUE MONETARY ECONOMICS MONETARY FUND NATURAL RESOURCE NATURAL RESOURCES NET CAPITAL OPEN ECONOMIES OUTPUT PER CAPITA INCOME PER CAPITA INCOME LEVELS PER CAPITA INCOMES POLICY ANALYSIS POLICY MAKERS POLICY RESEARCH POLICY RESPONSES POLITICAL DETERMINANTS POLITICAL ECONOMY POLITICAL INSTABILITY POLITICAL REGIMES POLITICAL RISK POLITICAL STABILITY POOR COUNTRIES PRICE VOLATILITY PRIVATE SECTOR CREDIT PRODUCTION COSTS PROTECTIONISM REAL GDP REINVESTMENT REINVESTMENT OF EARNINGS RELATIVE PRICE RICH COUNTRIES ROBUSTNESS CHECKS SHORT-TERM CAPITAL SIGNIFICANT EFFECT SLOWDOWNS STANDARD DEVIATION STANDARD DEVIATIONS STOCK MARKET STOCK MARKET CAPITALIZATION TAKEOVER TECHNOLOGY TRANSFER TRADE OPENNESS UNCERTAINTY VOLATILITY WELFARE IMPACT WORLD DEVELOPMENT INDICATORS WORLD ECONOMY WORLD INVESTMENT REPORT WORLD TRADE
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World Bank, Washington, DC
Middle East and North Africa
2014-03-18T19:55:37Z | 2014-03-18T19:55:37Z | 2014-02

This paper investigates the factors associated with foreign direct investment "surges" and "stops," defined as sharp increases and decreases, respectively, of gross foreign direct investment inflows to the developing world and differentiated based on whether these events are led by waves in greenfield investments or mergers and acquisitions. Greenfield-led surges and stops occur more frequently than mergers and acquisitions-led ones and different factors are associated with the onset of the two types of events. Global liquidity is the only factor significantly associated with a surge, regardless of its kind, while decline in global economic growth and a surge in the preceding year are the only predictors of a stop. Greenfield-led surges and stops are more likely in low-income and resource-rich countries than elsewhere. Global growth, financial openness, and domestic economic and financial instability enable mergers and acquisitions-led surges. These results differ from those in the literature on surges and stops and are particularly relevant in countries where foreign direct investments dominate capital flows.

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