1、中文 3500 字 本科毕业论文外文翻译 外文题目： Foreign Direct Investment and Inflation 出 处： Southern Economic Journal 2009,76(2),419-423 作 者： Selin Sayek 一、英文 Foreign Direct Investment and Inflation 1. Introduction In recent years interest in understanding the determinants of foreign direct investment (FDI) has intensi
2、fied hand in hand with an increasing volume of FDI flows. From 1990 to 2005, the total worldwide FDI inflows increased from $203 billion to $974 billion. Almost all developing countries are competing to attract a major share of these inflows. In fact, the share of net FDI inflows in the gross domest
3、ic product (GDP) of middle income countries has risen from 0.74% in the 1970s to 1.08% between 1985 and 1994, and to 2.85% between 1995 and 2005.1 The intensified competition to attract more FDI has led to changes in the regulatory frameworks provided by almost all countries. According to the recent
4、 World Investment Report (UNCTAD 2003), during the period 19912002, around 95% of the changes in worldwide laws governing FDI have been favorable to multinational firm activity. Establishment of investment promotion agencies as well as provision of fiscal incentives have accompanied these improvemen
5、ts in local regulatory environments. Given the objectives of host countries to attract high-quality investments and to ensure benefits from such foreign activity, it is important to fully understand the factors influencing the FDI flows. This article primarily studies the role of inflation among the
6、 factors that drive FDI. Inflation rates have increased from around 5 to 10% on average in developing countries during the 1970s, followed by an increase of 49% on average among developing countries between 1985 and 1994. This trend of increasing inflation rates has been reversed in the late 1990s；
7、the inflation rates in developing countries have on average declined to 9.2% during 19952004, a period during which the net FDI inflows as a share of GDP have more than doubled in the middle income countries. Given the focus among developing countries to attract more FDI, it is interesting to analyz
8、e whether the increasing inflation rates in the 1970s and 1980s might have been a deterrent for FDI inflows and whether their reversal in the 1990s might have contributed to the increase in FDI inflows to these economies. Despite not providing conclusive evidence, the coincidences of high inflation
9、and low FDI versus the low inflation and high FDI inflows into these developing countries motivates investigation of the possible links between the two variables. Therefore the broad objective of this framework is to study the effects of inflation on the investment decision of multinational enterpri
10、ses (MNEs). Changes in inflation rates of the domestic or foreign country are anticipated to alter the net returns and optimal investment decisions of the MNE. In studying the explicit role of inflation in determining the investment pattern of MNEs across domestic and foreign locations, I use a mode
11、l that is in fact discussing an investment-smoothing behavior of the MNE that faces domestic and foreign nominal shocks. In this framework the act of investment smoothing captures a shift of investments across locations and not across time. My argument is in line with Aizenman (1992), who notes that
12、 the goal of diversifying exposure to country-specific shocks induces producers to become multinationals. This investment-smoothing behavior can further be thought of as a production flexibility approach, where the MNE can shift production (and trade decisions) depending on the relative favorability
13、 of conditions in the two countries as discussed in Sung and Lapan (2000). Parallel to these two papers, the current model shows that the existence of FDI opportunities is tantamount to increased hedging possibilities against inflation taxes even if no explicit hedging instrument is modeled. In fact
14、, MNEs minimize the negative effects of policy changes, in this case expected changes in the inflation rate, via a shift in the location of production across home and host countries. The model shows that the ability of a multinational to invest in two alternative economies does reduce the real effec
15、ts of nominal shocks. There are models in the literature that have studied the investment decisions of MNEs in general equilibrium models with monetary shocks. However, a majority of these studies have focused on the exchange rate shocks, not inflation shocks as I do in this article. Three such arti
16、cles are Aizenman (1992), Devereux and Engel (1999), and Russ (2007), which all focus on the effects of exchange rate-related policies on FDI decisions. Aizenman (1992) models the production flexibility approach into an option value model to discuss the role of exchange rate uncertainty in FDI decis
17、ions, finding that volatility under flexible exchange rates can in fact deter FDI. Devereux and Engel (1999), on the other hand, show that if the MNEs are serving the host market, then exchange rate volatility can be loosely associated with higher MNE activity. Both models are relevant to the curren
18、t study, not in their focus on the link between exchange rate uncertainty and FDI, but in their simultaneous incorporation of MNE activity and monetary phenomena in the same model.2 Furthermore, these papers tend to discuss the effects of these shocks on foreign investment decisions without consider
19、ing the investment-smoothing effects made possible by the tandem decision of domestic and foreign investment by the MNE. The current model considers the effects of inflation on the domestic and foreign investment alternatives simultaneously, incorporating the fact that the FDI decision is not indepe
20、ndent of the domestic investment decision of the firm. As such, the article contributes to the literature that studies the relationship between monetary processes and FDI without explicitly controlling for the possibility of investment smoothing by the MNE. Besides, although there are models in the
21、literature that incorporate MNEs into general equilibrium models with money, the differential role of domestic inflation and foreign inflation on vertical and horizontal FDI have not been discussed explicitly in any of these models. The current analysis incorporates monetary phenomena into the model
22、, with a focus on the links with both vertical and horizontal FDI. As such, my model is similar in spirit to Aizenman and Marion (2004), who discuss the association between several uncertainties and vertical as well as horizontal FDI. Their results emphasize that uncertaintys effect is larger on ver
23、tical FDI than on horizontal FDI. The current studys results echo this by finding that the investment smoothing of MNEs, upon changes in monetary processes of the home and host countries, differs between vertical and horizontal FDI. This is an important finding, pointing to the importance of differe
24、ntiating across initial motives of FDI in modeling MNE behavior and studying the determinants of FDI. Another important characteristic of the model is that it allows for the financing of the FDI activity to occur through both domestic and foreign sources. Several studies in the literature have provi
25、ded evidence that MNEs not only use finances from the home country sources but that they also use foreign country financing. For example, Feldstein (1994) shows that, with the goal of minimizing the tax burden, U.S. foreign affiliates raise a significant amount of financial resources in their host c
26、ountry markets. This access to host country financial markets is furthermore a means of hedging against fluctuations in future local currency earnings. This is a point further emphasized by Lehmann, Sayek, and Kang (2004), who find that there is an association between the extent of exposure to local
27、 currency revenues and contribution of host country finances to total financing, generating a relationship between FDI and the financial market development of the host country. Taking a cue from these studies, my model allows for financing from both domestic (home) country sources and foreign (host) country sources, where not only does FDI become a hedging instrument, but a shift between alternative means of financing also does.3 Allowing
