Institutional Quality and FDI to the South: An Analytical Approach

Rodolphe Desbordes, Julia Darby and Ian Wooton ()

No 11-31, Working Papers from University of Strathclyde Business School, Department of Economics

Abstract: We ask whether MNEs’ experience of institutional quality and political risk within their “home†business environments influences their decisions to enter a given country. We set out an explicit theoretical model that allows for the possibility that firms from South source countries may, by virtue of their experience with poor institutional quality, derive a competitive advantage over firms from North countries with respect to investing in destinations in the South. We show that the experience gained by such MNEs of poorer institutional environments may result in their being more prepared to invest in other countries with correspondingly weak institutions.

Keywords: foreign direct investment; multinational enterprises; institutional quality (search for similar items in EconPapers)
JEL-codes: F23 O1 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2011-10
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (4)

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Working Paper: Institutional Quality and FDI to the South An Analytical Approach (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:str:wpaper:11-31

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