U.S. FOREIGN DIRECT INVESTMENT IN FOOD PROCESSING INDUSTRIES OF LATIN AMERICAN COUNTRIES: A DYNAMIC APPROACH

In this report, we apply a dynamic cost minimization model of U.S. foreign direct investment in food processing industries to nine Latin American countries. Estimation of the first order condition (Euler equation) using a consistent rational expectation assumption showed that dynamic structure explains the investment process in food processing industries quite well. U.S. food processors in Latin America are driven by the host country?s level of demand and by labor cost considerations. They can adjust their investment position quickly. We also quantified short and long-run effects of shocks to exogenous variables on foreign direct investment position.


Issue Date:
2005
Publication Type:
Report
PURL Identifier:
http://purl.umn.edu/23533
Total Pages:
16
Series Statement:
Agribusiness & Applied Economics Report No. 543




 Record created 2017-04-01, last modified 2017-08-24

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