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Abstract

This paper analyzes the determinants of foreign direct investments by the U.S. food processing industry in developed and developing countries. We find that market size, per capita income, openness of the economy, inflation rate, and exchange rate significantly affect U.S. food processing firms' decisions to invest abroad, but their influence differs between developed and developing countries. Per capita income, which is an indicator of economic development, is positively associated with FDI in developing countries, but negatively associated with FDI in developed countries. Foreign affiliate sales and exports are generally found to be substitutes in developed countries and complements in developing countries.

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