Responses of FDI to geopolitical risks: The role of governance,information, and technology |
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| Affiliation: | 1. Swiss National Bank, Börsenstrasse 15, 8022 Zürich, Switzerland;2. Lee Kuan Yew School of Public Policy, National University of Singapore, 469C Bukit Timah Rd, 259772, Singapore |
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| Abstract: | We show that rising geopolitical risk and geopolitical uncertainty (GPR) deter foreign direct investment (FDI). We further explore the role of governance, information, and technology in shaping the responses of FDI to GPR and document three main findings. First, effective governance in the destination market safeguards FDI against GPR. Second, multinational corporations with better information gained from closer geographic, cultural, and commercial ties choose to delay FDI in response to rising GPR instead of managing it. Third, FDI in more R&D-intensive industries is more resilient to GPR because intangible technology can more easily be transferred across borders. |
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| Keywords: | Geopolitical risk Geopolitical uncertainty FDI Governance Policy Tie Technology Information FDI" },{" #name" :" keyword" ," $" :{" id" :" key0050" }," $$" :[{" #name" :" text" ," _" :" Foreign direct investment GPR" },{" #name" :" keyword" ," $" :{" id" :" key0060" }," $$" :[{" #name" :" text" ," _" :" Geopolitical risk and uncertainty EM" },{" #name" :" keyword" ," $" :{" id" :" key0070" }," $$" :[{" #name" :" text" ," _" :" Emerging market MNC" },{" #name" :" keyword" ," $" :{" id" :" key0080" }," $$" :[{" #name" :" text" ," _" :" Multinational corporation R&D" },{" #name" :" keyword" ," $" :{" id" :" key0090" }," $$" :[{" #name" :" text" ," _" :" Research and development |
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