The merits of horizontal versus vertical FDI in the presence of uncertainty

• 成果类型: Article
• 署名作者: Aizenman, J; Marion, N
• 署名单位: University of California System; University of California Santa Cruz; University of California System; University of California Santa Cruz; National Bureau of Economic Research; Dartmouth College
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2003.08.003
• 发表日期: 2004
• 页码: 125-148
• 关键词: Horizontal and Vertical FDI; supply and demand uncertainty; Sovereign risk

摘要

We examine the impact of uncertainty on vertical and horizontal FDI. Our model shows that greater supply uncertainty reduces the expected income from vertical FDI but increases the expected income from horizontal FDI. Greater demand uncertainty adversely affects the expected income under both production modes. Uncertainty about predatory actions by the host country is more costly to the multinational under vertical than under the horizontal mode. We examine sales by foreign affiliates of U.S. parent companies. Conditioning on host-country characteristics thought to influence FDI, we find evidence that volatility and sovereign risk have a greater negative impact on vertical FDI than on horizontal FDI. (C) 2003 Elsevier B.V. All rights reserved.