The effects of financial development on foreign direct investment

• 成果类型: Article
• 署名作者: Desbordes, Rodolphe; Wei, Shang-Jin
• 署名单位: University of Strathclyde; National Bureau of Economic Research; Columbia University; Columbia University; Center for Economic & Policy Research (CEPR)
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2017.02.008
• 发表日期: 2017
• 页码: 153-168
• 关键词: Financial constraints; financial development; Foreign direct investment; greenfield; Mergers and Acquisitions

摘要

This paper empirically investigates the various effects that source and destination countries' financial development (SFD and DFD respectively) have on foreign direct investment (FDI). We establish causality by exploiting variations in both country-specific financial development and sector-specific financial vulnerability. This approach is made possible by our use of detailed databases on real manufacturing FDI projects worldwide. We find that both SFD and DFD have a large positive influence on greenfield, expansion, and mergers & acquisitions FDI, by directly increasing access to external finance and indirectly promoting manufacturing activity. The overall economic impacts of SFD and DFD tend to be similar but their direct and indirect effects vary across margins and types of FDI.