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An Assignment Theory of Foreign Direct Investment.

Abstract:

We develop an assignment theory to analyse the volume and composition of foreign direct investment (FDI). Firms conduct FDI by either engaging in greenfield investment or in cross-border acquisitions. Cross-border acquisitions involve firms trading heterogeneous corporate assets to exploit complementarities, while greenfield FDI involves setting up a new production division in the foreign country. In equilibrium, greenfield FDI and cross-border acquisitions coexist within the same industry, b...

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Journal:
Review of Economic Studies
Volume:
75
Issue:
2
Publication date:
2008-01-01
DOI:
URN:
uuid:d7bfa2bd-428e-418e-ae96-264a7ac5fc83
Local pid:
oai:economics.ouls.ox.ac.uk:12854
Language:
English

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