Exchange Rates Linkage and Foreign Direct Investment--Evidence from Taiwan

• Main Authors: Yi-ann Chi, 翟憶安
• Other Authors: Chia-ching Lin
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/01284123834828053125

碩士 === 南華大學 === 管理經濟學系經濟學碩士班 === 96 === 　　The most significant difference between Foreign Direct Investment and domestic investment is that the former must involve the exchange risk of foreign currency. The past studies have demonstrated that the firm’s Foreign Direct Investment is under the influnce of the level and volatility of exchange rate. However, there were no consistent conclusions with regard to the ways and directions of the influences. Some literatures indicated that the difference was resulted from the firms’ different investment motivations. However, the above literatures neglected that the places for Foreign Direct Investment is an important factor in firms’ decision. When the firms consider at least two investment places, the link between the currency of the host country and the third country should be one of the important factors influencing the firms’ Foreign Direct Investment. In order to find the influence of exchagen rate link on the firms’ Foreign Direct Investment, this study allocated Taiwan businessmen’s Foreign Direct Investment, according to investment motivations, into cost orientation by reducing production cost to maintain the competitiveness and market orientation by expanding the market to increased the sales. With regard to different investment motivations, this study estimates the influences of exchange rate level,volatility and link of the host country on Taiwan businessmen’s Foreign Direct Investment to validate and compare the hypotheses of two investment motivations in this study. 　　 　　This study treated panel data of Taiwan businessmen’s Foreign Direct Investment in U.S., Japan, Europe (Britain, France, Germany, the Netherlands), Malaysia, Indonesia, the Philippines, Vietnam, Thailand and China from 1985 to 2006 as the research targets. The empirical result showed that as to market orientation, relative real exchange rate , relative real exchange rate volatility and growth rate of real GNP and of host country export from Taiwan to host country have positive and significant influences on Taiwan businessmen’s Foreign Direct Investment. Relative real exchange rate volatility of the third countrys reveal negative influence on Taiwan businessmen’s Foreign Direct Investmnet. As to cost orientation, relative real exchange rate and relative real exchange rate volatility of the host country reveal significant and negative influences on Taiwan bussinessmen’s FDI. Relative real exchange rate of the third country, the cross product between dummy variable of exchange rate linkage and relative real exchgange rate volatilty of host country and export from Taiwan to host country reveal significant and positive influences on Taiwan businessmen’s FDI.