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Foreign investment dynamics

Ludwig Maximilian University of Munich, Faculty of Economy - MUNICH - 2015

This project aims to understand the investment dynamics for multinationals, focusing on three aspects. First we will analyze globalization strategies (microeconomic level): do companies typically export in a foreign market before investing in it, or are they natively very different to those which have a prior “foreign market experience”? We will also evaluate the risks in terms of sunk costs for new investments, and why multinationals start (or why they cease) investing in some countries. Secondly we intend to develop a theoretical model explaining the empirical results and enabling us to obtain quantitative estimates of the main principals guiding the model. The third and last aspect will be using these estimates to bring viable strategies to the political debate, as we consider driving foreign direct investment up as a strategy that will bring growth and employment. The approach will keep a specific outlook on other European countries.