Work

Multinational investment activity under policy uncertainty in host and competing countries

Year: 2026

Type: article

Abstract: Policy uncertainty challenges multinational corporations seeking stable destinations for Foreign Direct Investment (FDI). This study examines the influence of economic policy uncertainty in both potential host countries and competitor nations. Analyzing firm-destination data, we find that higher economic policy uncertainty in host countries discourages greenfield FDI inflows by US multinationals. Conversely, higher economic policy uncertainty in competing destinations presents an attractive alternative, leading to increased FDI inflows. Notably, competitor uncertainty's influence has grown in recent years following the uneven rise in global economic policy uncertainty. Our findings highlight the competitive advantage associated with policy stability and predictability for attracting FDI.

Source: Journal of International Economics

DOI: 10.1016/j.jinteco.2026.104252

Authors: Daisoon Kim, Sunhyung Lee

Institutions: North Carolina State University, Montclair State University

Language: English

Topic: International Business and FDI

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $4,300