Theories of FDI<br />Agarwal(1980):<br />1.Theories assuming perfect markets<br />2.Theories assuming imperfect markets<br...
Theories assuming perfect markets<br />1.The differential rates of return hypothesis<br />2.The portfolio diversification ...
Theories assuming imperfect markets<br />1.The industrial organization hypothesis<br />2.The internalization hypothesis<br...
Other theories<br />1.The internal financing hypothesis<br />2.The currency areas hypothesis <br />   (the effect of the e...
Theories based on other variables<br />1.Political risk<br />2.Country risk<br />3.Tax policies<br />4.Trade barriers<br /...
The differential rates of return hypothesis<br />1.定義:from low rate of return to high rate of return (mr=mc)<br />2.條件:ris...
The portfolio diversification hypothesis<br />1:定義: rate of return and risk (diversification)<br />2:實證: weak support (mea...
The market size hypothesis<br />1:定義:the volume of FDI in a host country depends on its market size (sales: economies of s...
The industrial Organization hypothesis<br />1:定義:firm-specific advantages > disadvantages<br />Lall and Streeten (1977) (i...
The internalization hypothesis<br />1:定義: from market transactions to internal transactions (mr = mc)<br />2:原因:market fai...
The location Hypothesis<br />原因: factors immobility (e.g. labor or material)<br />實證:+ /- (incidence or severity/ union)<b...
The eclectic theory<br />Dunning= O+L+I<br />Conditions: ownership, Internalization,     location advantages<br />If owner...
The production life cycle hypothesis<br />3 stages: initial production, maturity, standardization (products innovation, ex...
The Oligopolistic reactions hypothesis<br />原因: maintain market shares, status quo, equilibrium<br />問題:why initial invest...
The internal financing hypothesis<br />意義:the utilizaiton of profit generated by a subsidiary to finance the expansion of ...
The currency areas hypothesis<br />意義:strong currency country tend to invest abroad, sources of FDI<br />          weak cu...
The Hyp of diversification <br />1: barrier or cost <br />2: MNC opportunity<br />
The Kojima Hyp<br />1:trade-orientated<br />2:anti-trade-orientated<br />
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Theories of fdi

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Theories of fdi

  1. 1. Theories of FDI<br />Agarwal(1980):<br />1.Theories assuming perfect markets<br />2.Theories assuming imperfect markets<br />3.Other theories<br />4.Theories based on other variables<br />
  2. 2. Theories assuming perfect markets<br />1.The differential rates of return hypothesis<br />2.The portfolio diversification hypothesis<br />3.The market size hypothesis<br />
  3. 3. Theories assuming imperfect markets<br />1.The industrial organization hypothesis<br />2.The internalization hypothesis<br />3.The location hypothesis<br />4.The eclectic theory<br />5.The product life cycle hypothesis<br />6.The oligopolistic reactions hypothesis<br />
  4. 4. Other theories<br />1.The internal financing hypothesis<br />2.The currency areas hypothesis <br /> (the effect of the exchange rate)<br />3.The hypothesis of diversification with barriers to international capital flows<br />4.The Kojima hypothesis<br />
  5. 5. Theories based on other variables<br />1.Political risk<br />2.Country risk<br />3.Tax policies<br />4.Trade barriers<br />5.Government regulations<br />6.Stragegic and long-term factors<br />
  6. 6. The differential rates of return hypothesis<br />1.定義:from low rate of return to high rate of return (mr=mc)<br />2.條件:risk neutrality (substitute)<br />3.實證:not support (measures); observation different<br />4.質疑: other reasons ;capital or physical capital (ex. Human)<br />
  7. 7. The portfolio diversification hypothesis<br />1:定義: rate of return and risk (diversification)<br />2:實證: weak support (measure problem-ante or post, report or actual)<br />3:優缺點: (1)generalized (2)plasusible explanation (3) include risk<br /> (1)why FDI (2)FDI or portfolio investment<br />
  8. 8. The market size hypothesis<br />1:定義:the volume of FDI in a host country depends on its market size (sales: economies of scale)<br />2:理論:neoclassical domestic investment theory<br />3:實證: supported<br />4:疑問: measures problem<br />
  9. 9. The industrial Organization hypothesis<br />1:定義:firm-specific advantages > disadvantages<br />Lall and Streeten (1977) (intangible assets difficult to sell)<br />(1)Capital (2)management (3)technology(4)Marketing (5)access to raw materials(6) Economies of scale(7) bargaining and political power<br />優點:explain why firms invest in foreign country<br />缺點:why choose A not B<br />
  10. 10. The internalization hypothesis<br />1:定義: from market transactions to internal transactions (mr = mc)<br />2:原因:market failure or imperfection or inefficiency <br />3:優點: time lags, bargaining, uncertainty and cost<br />4:缺點: no empirical evident <br /> hyp cannot test directly<br />
  11. 11. The location Hypothesis<br />原因: factors immobility (e.g. labor or material)<br />實證:+ /- (incidence or severity/ union)<br />
  12. 12. The eclectic theory<br />Dunning= O+L+I<br />Conditions: ownership, Internalization, location advantages<br />If ownership no Internalization==license<br />if ownership, Internalization no location= export<br />If ownership, Internalization, location = FDI<br />
  13. 13. The production life cycle hypothesis<br />3 stages: initial production, maturity, standardization (products innovation, export, FDI)<br />問題:USA no longer products innovator<br />
  14. 14. The Oligopolistic reactions hypothesis<br />原因: maintain market shares, status quo, equilibrium<br />問題:why initial investment<br />
  15. 15. The internal financing hypothesis<br />意義:the utilizaiton of profit generated by a subsidiary to finance the expansion of FDI by an MNC in the country where the subsidiary operates. (internal financing < external)<br />理由:1) capital market restriction, 2)inefficiency<br />實證: support / not support<br />
  16. 16. The currency areas hypothesis<br />意義:strong currency country tend to invest abroad, sources of FDI<br /> weak currency country recipients of FDI<br />The real exchange rate<br />升值: 不利出口, FDI 取代出口<br />貶值: 資產具吸引力(e.g. USA)<br />
  17. 17. The Hyp of diversification <br />1: barrier or cost <br />2: MNC opportunity<br />
  18. 18. The Kojima Hyp<br />1:trade-orientated<br />2:anti-trade-orientated<br />
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