Exchange Rate Volatility and FDI Inflows : Evidence from Cross-Country Panel Data

Exchange Rate Volatility and FDI Inflows : Evidence from Cross-Country Panel Data

Using a panel of 80 developing and developed countries for the period 1990-2015, this studyanalyses the relationship between exchange rate volatility and foreign direct investment (FDI)inflows. The results reveal a negative relationship between de...

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Bibliographic Details
Main Authors: Hanusch, Marek, Nguyen, Ha, Algu, Yashvir
Format: Working Paper
Language:English
Published: World Bank, Washington, DC 2018
Subjects:
EXCHANGE RATES
FOREIGN DIRECT INVESTMENT
FDI
CAPITAL FLOWS
CURRENCY VOLATILITY
Online Access:http://documents.worldbank.org/curated/en/534841528724321585/Exchange-rate-volatility-and-FDI-inflows-evidence-from-cross-country-panel-data
http://hdl.handle.net/10986/29911
id okr-10986-29911
recordtype oai_dc
spelling okr-10986-299112021-05-25T09:14:56Z Exchange Rate Volatility and FDI Inflows : Evidence from Cross-Country Panel Data Hanusch, Marek Nguyen, Ha Algu, Yashvir EXCHANGE RATES FOREIGN DIRECT INVESTMENT FDI CAPITAL FLOWS CURRENCY VOLATILITY Using a panel of 80 developing and developed countries for the period 1990-2015, this studyanalyses the relationship between exchange rate volatility and foreign direct investment (FDI)inflows. The results reveal a negative relationship between de facto exchange rate volatility andFDI. Reducing exchange rate volatility by 10 percent over one-year can boost FDI inflows—ceterisparibus—by an estimated 0.48 percentage points of GDP while the same reduction over the pastfive years can boost FDI inflows by 0.27 percentage points over the long-run. The results areapplied to the case of South Africa, which has been experiencing high volatility of the rand inrecent years. Reducing the rand's volatility to that of developing country peers, South Africa could boost FDI inflows by a potential of 0.25 percentage points of GDP. 2018-06-19T20:10:52Z 2018-06-19T20:10:52Z 2018-06 Working Paper http://documents.worldbank.org/curated/en/534841528724321585/Exchange-rate-volatility-and-FDI-inflows-evidence-from-cross-country-panel-data http://hdl.handle.net/10986/29911 English MTI Global Practice Discussion Paper;No. 2 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Working Paper
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic EXCHANGE RATES
FOREIGN DIRECT INVESTMENT
FDI
CAPITAL FLOWS
CURRENCY VOLATILITY
spellingShingle EXCHANGE RATES
FOREIGN DIRECT INVESTMENT
FDI
CAPITAL FLOWS
CURRENCY VOLATILITY
Hanusch, Marek
Nguyen, Ha
Algu, Yashvir
Exchange Rate Volatility and FDI Inflows : Evidence from Cross-Country Panel Data
relation MTI Global Practice Discussion Paper;No. 2
description Using a panel of 80 developing and developed countries for the period 1990-2015, this studyanalyses the relationship between exchange rate volatility and foreign direct investment (FDI)inflows. The results reveal a negative relationship between de facto exchange rate volatility andFDI. Reducing exchange rate volatility by 10 percent over one-year can boost FDI inflows—ceterisparibus—by an estimated 0.48 percentage points of GDP while the same reduction over the pastfive years can boost FDI inflows by 0.27 percentage points over the long-run. The results areapplied to the case of South Africa, which has been experiencing high volatility of the rand inrecent years. Reducing the rand's volatility to that of developing country peers, South Africa could boost FDI inflows by a potential of 0.25 percentage points of GDP.
format Working Paper
author Hanusch, Marek
Nguyen, Ha
Algu, Yashvir
author_facet Hanusch, Marek
Nguyen, Ha
Algu, Yashvir
author_sort Hanusch, Marek
title Exchange Rate Volatility and FDI Inflows : Evidence from Cross-Country Panel Data
title_short Exchange Rate Volatility and FDI Inflows : Evidence from Cross-Country Panel Data
title_full Exchange Rate Volatility and FDI Inflows : Evidence from Cross-Country Panel Data
title_fullStr Exchange Rate Volatility and FDI Inflows : Evidence from Cross-Country Panel Data
title_full_unstemmed Exchange Rate Volatility and FDI Inflows : Evidence from Cross-Country Panel Data
title_sort exchange rate volatility and fdi inflows : evidence from cross-country panel data
publisher World Bank, Washington, DC
publishDate 2018
url http://documents.worldbank.org/curated/en/534841528724321585/Exchange-rate-volatility-and-FDI-inflows-evidence-from-cross-country-panel-data
http://hdl.handle.net/10986/29911
_version_ 1764470694041616384

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