Determinants of International Activity: Evidence from the Chemical Industry

35 Pages Posted: 25 Oct 2004

See all articles by Andrea Fosfuri

Andrea Fosfuri

Charles III University of Madrid - Department of Business Administration

Date Written: September 2004

Abstract

This Paper empirically investigates two important determinants of international activity through wholly owned operations, joint-ventures and licensing, namely country risk and IPRs protection. Using a comprehensive database on investments in chemical plants during the period 1981-96, we show that higher levels of country risk are associated with less activity into recipient economies. The analysis also suggests that international activity with smaller resource commitment tends to be preferred in countries with higher levels of risk, and that multinational investment is more responsive to changes in risk conditions than indigenous investment. After controlling for several country characteristics, we do not find IPRs protection playing a significant role in fostering international activity or conditioning its mode.

Keywords: Foreign direct investment, technology licensing, country risk, IPRs protection, chemical industry

JEL Classification: F21, F23, O32, O34

Suggested Citation

Fosfuri, Andrea, Determinants of International Activity: Evidence from the Chemical Industry (September 2004). Available at SSRN: https://ssrn.com/abstract=609889

Andrea Fosfuri (Contact Author)

Charles III University of Madrid - Department of Business Administration ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

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