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Will FDI be Resilient in this Crisis?

Although foreign direct investment (FDI) flows have tended to remain resilient during previous crises, they may not behave in a similar fashion during the current crisis. Why? In past crises, the stability of FDI flows was significantly associated...

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Bibliographic Details
Main Authors: Calderon, Cesar, Didier, Tatiana
Language:English
Published: World Bank, Washington, DC 2012
Subjects:
ACCOUNTING
BANK LENDING
BUSINESS CYCLES
CAPITAL FLOWS
CAPITAL MARKETS
DEVELOPING COUNTRIES
DOMESTIC FIRMS
EMERGING ECONOMIES
EMERGING MARKET
EMERGING MARKET COUNTRIES
EMERGING MARKET ECONOMIES
EMERGING MARKETS
EQUITY FLOWS
FDI
FINANCIAL ACCOUNT
FINANCIAL CRISES
FINANCIAL CRISIS
FINANCIAL FLOWS
FINANCIAL RESOURCES
FOREIGN ACQUISITIONS
FOREIGN BUYERS
FOREIGN DIRECT INVESTMENT
FOREIGN DIRECT INVESTMENTS
FOREIGN INVESTORS
FOREIGN OWNERSHIP
INTERNATIONAL FINANCE
LIQUIDITY
LIQUIDITY CONSTRAINTS
LIQUIDITY CRISES
LIQUIDITY CRISIS
MERGER
MERGERS
NET CAPITAL
NET CAPITAL FLOWS
NET DEBT
NET EQUITY
NET EQUITY FLOWS
NET FLOWS
NET PORTFOLIO
NET PORTFOLIO EQUITY
NET PRIVATE
NET PRIVATE DEBT
PORTFOLIO
PORTFOLIO EQUITY
PRIVATE CAPITAL
PRIVATE CAPITAL FLOWS
PRIVATE DEBT
PRIVATE DEBT FLOWS
TRADE CREDIT
TRANSPARENCY
WORLD CAPITAL MARKETS
Online Access:http://documents.worldbank.org/curated/en/2009/01/11954152/fdi-resilient-crisis
http://hdl.handle.net/10986/11000
Description
Summary:Although foreign direct investment (FDI) flows have tended to remain resilient during previous crises, they may not behave in a similar fashion during the current crisis. Why? In past crises, the stability of FDI flows was significantly associated with an increase in mergers and acquisitions (M&A), reflecting 'fire-sale FDI'. In the present crisis, by contrast, M&A activity decreased significantly in the last quarter of 2008, and this trend may continue as long as the global crisis constrain the purchasing ability of foreign (acquiring) firms. These developments further illustrate that the nature of the current crisis differs considerably from previous ones, suggesting that certain key lessons from past crisis lessons might not apply in the current context.

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