Faculty Sponsor: Professor Balazs Zelity
Abstract: When an investor invests in another economy, they chose whether to repatriate their profit to their origin country or reinvest it in a host country. The reinvestment rate is the ratio of of the reinvestment to the total amount of the reinvestment and the repatriation. This project aims to identify the determinants of the FDI reinvestment rate. The fixed effects of the year, host country, and origin country were included in the regression model. Explanatory variables in the analysis were various distance measures including geographical, cultural, and religious distances and exchange rates and their yearly change, short-term interest rate, the Business Confidence Index, GDP growth rate, and trade openness. The regression results showed that the geographical distance, cultural distance, host country GDP growth rate, and origin country exchange rate change were the statistically significant factors affecting the reinvestment rate.
Poster_Jiyong_Lee