国际直接投资与通货膨胀外文原文.doc

国际直接投资与通货膨胀外文原文 Soulhern Economic Journal 2009, 762, 419-443 Foreign Direct Investment and Inflation Selin Sayek* Multinational etiterprises MNEs are able to shift investments between home and host countries to minimize the negative effects of changes in the macroeconomic environment. This article formalizes a model that allows studying this investment-smoothing behavior of MNEs facing inflation taxes in both the home and the host country. The MNE is allowed to invest in two economies, home and host, and to fmance its foreign direct investment FDI either through domestic or foreign sources. The investment smoothing by the MNE is studied for cases of both vertical and horizontal FDI. The results suggest FDI is used as a hedging tool, mitigating the effects of inflation taxes even if there are no formal hedging mechanisms. The investment-smoothing reaction of MNEs depends on the reason for investment, the fmancing sources of FDI, and the substitutability between factors of production. Finally, this investment- smoothing possibility FDI reduces the real negative effects of inflation. JEL Classification: E31, F21, F23 1. Introduction In recent years interest in understanding the determinants of foreign direct investment FDI has intensified hand in hand with an increasing volume of FDI flows. From 1990 to 2005, the total worldwide FDI inflows increased from $203 billion to $974 billion. Almost all developing countries are competing to attract a major share of these inflows. In fact, the share of net FDI inflows in the gross domestic product GDP of middle income countries has risen from 0.74% in the 1970s to 1.08% between 1985 and 1994, and to 2.85% between 1995 and 2005. The intensified competition to attract more FDI has led to changes in the regulatory frameworks provided by almost all countries. According to the recent World Investment Report UNCTAD 2003, during the period 1991-2002, around 95% of the changes in worldwide laws governing FDI hav