Abdessalem Gouidar, Ridha Nouira

108138

The Impact of Misalignment on FDI in the Developing Countries

The Impact of Misalignment on FDI in the Developing Countries

This paper contributes to a current and intense debate among economists concerning the impact that real exchange rate misalignment can have on FDI. To identify the degree of misalignment, a model of Edwards in Panel will be estimated for a sample of 52 developing countries over the period 1980-2010. Once the misalignment values are determined, they will be included in the FDI model. The results prove that the misalignment is a main determinant of the FDI in the developing countries. Indeed, the overvaluation has a negative and significant effect on the FDI while undervaluation does not have a significant effect on it. Finally, a persistent overvaluation in developing countries can slow down the flow of FDI to these countries, whereas the persistent undervaluation stimulates these flows.

Keywords:

Foreign direct investment Overvaluation, Undervaluation,

International Journal of Economics and Financial Issues-Cover

Başlangıç: 2011
Yayıncı: İlhan ÖZTÜRK

Arşiv

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