Work

The Economics of Foreign Direct Investment and Trade with an Application to the U.S. Food Processing Industry

Year: 1999

Type: article

Abstract: This article investigates the determinants of foreign direct investment and its relationship to trade in the U.S. food industry. A multinational corporation maximizes profits by choosing between production at home, which is exported, and production in a host country. This introduces the possibility that foreign affiliate sales can substitute and/or complement exports. The empirical framework consists of a four‐equations system with foreign affiliate sales, exports, affiliate employment, and FDI as endogenous variables. The results confirm small substitution between foreign sales and exports, and that the host country's protection policies affect the decision to invest abroad.

Source: American Journal of Agricultural Economics

DOI: 10.2307/1244593

Authors: Munisamy Gopinath, Daniel Pick, Utpal Vasavada

Institutions: Oregon State University, Economic Research Service, United States Department of Agriculture

Language: English

Topic: International Business and FDI

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Decent work and economic growth, Zero hunger

Open Access status: green

Funders: U.S. Department of Agriculture, Agriculture and Agri-Food Canada