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The Usefulness of Private and Public Information for Foreign Investment Decisions
- Publisher
- Wiley
- Copyright
- Copyright © 2001 Wiley Subscription Services, Inc., A Wiley Company
- ISSN
- 0008-4085
- eISSN
- 1540-5982
- DOI
- 10.1111/0008-4085.00083
- Publisher site
- See Article on Publisher Site
Abstract
In previous studies it has been found that new foreign investment is significantly related to the stock of existing investment in the country/region. This paper's contribution is the finding that a Japanese firm's new investment in an emerging economy is positively correlated with its own previous investment in that economy and also with the current/planned investments by competitors. These two channels are primarily substitutes; that is, investment by competitors becomes less salient when the firm has experience in the market. The correlated behaviour is not explained by industrial agglomerations but appears to reflect the value of private information to investment in emerging economies.
Journal
Canadian Journal of Economics/Revue Canadienne D'économique – Wiley
Published: May 1, 2001