IDEAS home Printed from https://ideas.repec.org/a/eee/forpol/v13y2011i5p338-344.html
   My bibliography  Save this article

Bilateral foreign direct investment in forest industry between the U.S. and Canada

Author

Listed:
  • Nagubadi, Rao V.
  • Zhang, Daowei

Abstract

In this study we examine the trends and various factors influencing bilateral foreign direct investment (FDI) in the U.S. and Canadian forest industry between 1989 and 2008. Using panel data analysis methods, we find that bilateral FDI is positively influenced by depreciation of host country's real exchange rates and exchange rate volatility, and home country's forest product imports and exports and round wood production, and negatively by home country's GDP, current outward FDI position in the rest of the world, and current domestic capital expenditure has no effect on the FDI in the forest industry. These results imply that both imports and exports are complementary to outward FDI and that bilateral FDI is a substitute of FDI to the rest of the word.

Suggested Citation

  • Nagubadi, Rao V. & Zhang, Daowei, 2011. "Bilateral foreign direct investment in forest industry between the U.S. and Canada," Forest Policy and Economics, Elsevier, vol. 13(5), pages 338-344, June.
  • Handle: RePEc:eee:forpol:v:13:y:2011:i:5:p:338-344
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1389934111000207
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kozo Kiyota & Shujiro Urata, 2004. "Exchange Rate, Exchange Rate Volatility and Foreign Direct Investment," The World Economy, Wiley Blackwell, vol. 27(10), pages 1501-1536, November.
    2. Martin S. Feldstein, 1995. "The Effects of Outbound Foreign Direct Investment on the Domestic Capital Stock," NBER Chapters, in: The Effects of Taxation on Multinational Corporations, pages 43-66, National Bureau of Economic Research, Inc.
    3. Braunerhjelm, Pontus & Oxelheim, Lars & Thulin, Per, 2005. "The relationship between domestic and outward foreign direct investment: The role of industry-specific effects," International Business Review, Elsevier, vol. 14(6), pages 677-694, December.
    4. Bruce A. Blonigen, 2019. "In Search of Substitution Between Foreign Production and Exports," World Scientific Book Chapters, in: Foreign Direct Investment, chapter 9, pages 293-323, World Scientific Publishing Co. Pte. Ltd..
    5. Laaksonen-Craig, Susanna, 2004. "Foreign direct investments in the forest sector: implications for sustainable forest management in developed and developing countries," Forest Policy and Economics, Elsevier, vol. 6(3-4), pages 359-370, June.
    6. XING, Yuqing, 2006. "Why is China so attractive for FDI? The role of exchange rates," China Economic Review, Elsevier, vol. 17(2), pages 198-209.
    7. Kenneth A. Froot & Jeremy C. Stein, 1991. "Exchange Rates and Foreign Direct Investment: An Imperfect Capital Markets Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1191-1217.
    8. Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2005. "Foreign Direct Investment and the Domestic Capital Stock," American Economic Review, American Economic Association, vol. 95(2), pages 33-38, May.
    9. repec:bla:kyklos:v:54:y:2001:i:1:p:89-113 is not listed on IDEAS
    10. Bruce Blonigen, 2005. "A Review of the Empirical Literature on FDI Determinants," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 33(4), pages 383-403, December.
    11. Christian Schmidt & Udo Broll, 2009. "Real exchange-rate uncertainty and US foreign direct investment: an empirical analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(3), pages 513-530, October.
    12. Alan Rugman, 1980. "Internalization as a general theory of foreign direct investment: A re-appraisal of the literature," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 116(2), pages 365-379, June.
    13. Kun‐Ming CHEN & Hsiu‐Hua RAU & Chia‐Ching LIN, 2006. "The Impact Of Exchange Rate Movements On Foreign Direct Investment: Market‐Oriented Versus Cost‐Oriented," The Developing Economies, Institute of Developing Economies, vol. 44(3), pages 269-287, September.
    14. Feldstein, Martin & Hines, James R. & Hubbard, R. Glenn (ed.), 1995. "The Effects of Taxation on Multinational Corporations," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226240954, June.
    15. Goldberg, Linda S, 1993. "Exchange Rates and Investment in United States Industry," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 575-588, November.
    16. Cushman, David O, 1985. "Real Exchange Rate Risk, Expectations, and the Level of Direct Investment," The Review of Economics and Statistics, MIT Press, vol. 67(2), pages 297-308, May.
    17. Braunerhjelm, Pontus & Oxelheim, Lars & Thulin, Per, 2005. "The Relationship Between Domestic and Outward Foreign Investment Revisited: The Impact of Industry-Specific Effects," Working Paper Series in Economics and Institutions of Innovation 35, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    18. Steven Globerman & Daniel M Shapiro, 1999. "The Impact of Government Policies on Foreign Direct Investment: The Canadian Experience," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(3), pages 513-532, September.
    19. Campa, Joe Manuel, 1993. "Entry by Foreign Firms in the United States under Exchange Rate Uncertainty," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 614-622, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhang, Yijing & Toppinen, Anne & Uusivuori, Jussi, 2014. "Internationalization of the forest products industry: A synthesis of literature and implications for future research," Forest Policy and Economics, Elsevier, vol. 38(C), pages 8-16.
    2. Martin Coiteux & Patrick Rizzetto & Lena Suchanek & Jane Voll, 2014. "Why Do Canadian Firms Invest and Operate Abroad? Implications for Canadian Exports," Discussion Papers 14-7, Bank of Canada.
    3. Das, Joy & Tanger, Shaun, "undated". "Flow of FDI in Softwood Lumber Industry from Canada to the USA: A Study of the Pine Beetle’s Influence on Economic Decision-Making in the North American Wood Products Sector," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259973, Agricultural and Applied Economics Association.
    4. Mei Ling Wang & Si Lu Pang & Feng Wang & Xin Guo & Zheng Xia He, 2021. "Dynamic interaction between outward foreign direct investment and home country industrial upgrading: Regional differences in China," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2293-2317, December.
    5. Lal, Madan & Kumar, Satish & Pandey, Dharen Kumar & Rai, Varun Kumar & Lim, Weng Marc, 2023. "Exchange rate volatility and international trade," Journal of Business Research, Elsevier, vol. 167(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yuko Hashimoto & Konstantin M. Wacker, 2012. "The Role of Risk and Information for International Capital Flows: New Evidence from the SDDS," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 124, Courant Research Centre PEG.
    2. Matthias Busse & Carsten Hefeker & Signe Nelgen, 2013. "Foreign Direct Investment and Exchange Rate Regimes," Economics Bulletin, AccessEcon, vol. 33(1), pages 843-858.
    3. Warren Moraghen & Boopen Seetanah & Noor Sookia, 2019. "Explaining Heterogeneity in the Effect of the Exchange Rate and Exchange Rate Volatility on Foreign Direct Investment: A Meta‐Analysis Approach," African Development Review, African Development Bank, vol. 31(3), pages 275-291, September.
    4. Zerin Jannat, 2020. "The Impact of Exchange Rate Volatility on Foreign Direct Investment Inflows: Evidence from South Asia," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 10(3), pages 101-116.
    5. Chia‐Ching Lin & Kun‐Ming Chen, 2022. "Market competition, exchange rate uncertainty, and foreign direct investment," Review of Development Economics, Wiley Blackwell, vol. 26(1), pages 405-422, February.
    6. Julian Emami Namini & Enrico Pennings, 2009. "Horizontal Multinational Firms, Vertical Multinational Firms and Domestic Investment," Tinbergen Institute Discussion Papers 09-004/2, Tinbergen Institute.
    7. Ni, Shawn & Ratti, Ronald A., 2009. "Heterogeneous parameter uncertainty and the timing of investment during crisis," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-22.
    8. Takagi, Shinji & Shi, Zongying, 2011. "Exchange rate movements and foreign direct investment (FDI): Japanese investment in Asia, 1987–2008," Japan and the World Economy, Elsevier, vol. 23(4), pages 265-272.
    9. Nicholas Apergis & Dimitrios Asteriou & Kalliroi Papathoma, 2013. "The Explanatory Variables of Outward Foreign Direct Investment: Panel Evidence," American Journal of Economics and Business Administration, Science Publications, vol. 4(4), pages 207-215, July.
    10. Warren Moraghen & Boopen Seetanah & Noor Sookia, 2021. "Impact of exchange rate and exchange rate volatility on foreign direct investment inflow for Mauritius: A dynamic time series approach," African Development Review, African Development Bank, vol. 33(4), pages 581-591, December.
    11. repec:bla:rdevec:v:14:y:2010:i:s1:p:466-486 is not listed on IDEAS
    12. Qi, Jianhong & Liu, Hui & Zhang, Zhaoyong, 2021. "Exchange rate uncertainty and the timing of Chinese Outward Direct Investment," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 1193-1204.
    13. Shi, Jiao, 2019. "Vertical FDI and exchange rates over the business cycle: The welfare implications of openness to FDI," Journal of Development Economics, Elsevier, vol. 138(C), pages 274-293.
    14. Syarifuddin, Ferry, 2020. "The Dynamics of Foreign Direct Investment and Exchange Rates: An Interconnection Approach in ASEAN," MPRA Paper 104596, University Library of Munich, Germany.
    15. Justin Paul & Gurmeet Singh, 2017. "The 45 years of foreign direct investment research: Approaches, advances and analytical areas," The World Economy, Wiley Blackwell, vol. 40(11), pages 2512-2527, November.
    16. Manop Udomkerdmongkol & Oliver Morrissey & Holger Görg, 2009. "Exchange Rates and Outward Foreign Direct Investment: US FDI in Emerging Economies," Review of Development Economics, Wiley Blackwell, vol. 13(4), pages 754-764, November.
    17. Marcin Humanicki & Robert Kelm & Krzysztof Olszewski, 2013. "Foreign Direct Investment and Foreign Portfolio Investment in the contemporary globalized world: should they be still treated separately?," NBP Working Papers 167, Narodowy Bank Polski.
    18. Shi Li & Hironobu Nakagawa, 2022. "Exchange rates and foreign direct investment: Evidence from Chinese firm‐level data," The World Economy, Wiley Blackwell, vol. 45(9), pages 2902-2923, September.
    19. Hermann Sintim-Aboagye & Chandana Chakraborty & Serapio Byekwaso, 2017. "Foreign Capital Flows, Uncertainties of Exchange Rates and Central Bank Independence: Implications for Emerging Economies," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 45(4), pages 485-496, December.
    20. Schmidt, Christian W. & Broll, Udo, 2008. "The effect of exchange rate risk on U.S. foreign direct investment: An empirical analysis," MPRA Paper 10713, University Library of Munich, Germany.
    21. Arbeláez, Harvey & Ruiz, Isabel, 2013. "Macroeconomic antecedents to U.S. investment in Latin America," Journal of Business Research, Elsevier, vol. 66(3), pages 439-447.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:forpol:v:13:y:2011:i:5:p:338-344. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/forpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.