Institutional Quality and FDI to the South: An Analytical Approach

Rodolphe Desbordes, Julia Darby, Ian Wooton

Research output: Working paperDiscussion paper

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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.
Original languageEnglish
Place of PublicationGlasgow
PublisherUniversity of Strathclyde
Pages1-17
Number of pages18
Volume11
Publication statusPublished - Aug 2011

Keywords

  • foreign direct investment
  • multinational enterprises
  • institutional quality

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