Foreign direct investment vs. foreign portfolio investment
By: Itay Goldstein, Assaf Razin.
Contributors: Razin, Assaf.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11047; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11047.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Investments, Foreign -- Mathematical models.; Portfolio management -- Mathematical models.
Other titles: Foreign direct investment versus foreign portfolio investment
Description: "The paper develops a model of foreign direct investments (FDI) and foreign portfolio investments (FPI).  FDI is characterized by hands-on management style which enables the owner to obtain relatively refined information about the productivity of the firm.  This superiority, relative to FPI, comes with a cost: a firm owned by the relatively well-informed FDI investor has a low resale price because of a "lemons" type asymmetric information between the owner and potential buyers.  The model can explain several stylized facts regarding foreign equity flows, such as the larger ratio of FDI to FPI inflows in developing countries relative to developed countries, and the smaller volatility of FDI net inflows relative to FPI net inflows"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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