How Does the Exchange Rate and Its Volatility Influence FDI to Canada? A Disaggregated Analysis
This study investigates the relationship between the real effective exchange rate (REER) and its volatility with the net inflow of foreign direct investment (FDI) to Canada, placing a novel emphasis on sector-level analysis. The study utilizes time series data from 2007 to 2022 and employs the autor...
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| Veröffentlicht in: | Journal of risk and financial management 2024-02, Vol.17 (2), p.88 |
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| creator | Lajevardi, Hooman Chowdhury, Murshed |
| description | This study investigates the relationship between the real effective exchange rate (REER) and its volatility with the net inflow of foreign direct investment (FDI) to Canada, placing a novel emphasis on sector-level analysis. The study utilizes time series data from 2007 to 2022 and employs the autoregressive distributed lag (ARDL) approach to assess short-run and long-run relationships between the said variables. The findings reveal significant impacts of changes in REER, its volatility, and GDP on net FDI in the short run, with lasting effects of REER and its volatility, lagged GDP, and trade openness on FDI in the long run. At the sectoral level, FDI inflows in energy and mining, manufacturing, finance, and insurance exhibit significant sensitivity to changes in REER. Simultaneously, the volatility of REER has a significant impact on FDI inflows in manufacturing industries and the finance and insurance sector in the short run. In the long run, REER exerts a significant influence on the net FDI inflows in energy and mining, as well as manufacturing industries. The asymmetry in findings suggests a need for sector-specific attention to retaining and attracting FDI to Canada. |
| doi_str_mv | 10.3390/jrfm17020088 |
| format | Article |
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| identifier | ISSN: 1911-8074 |
| ispartof | Journal of risk and financial management, 2024-02, Vol.17 (2), p.88 |
| issn | 1911-8074 1911-8066 1911-8074 |
| language | eng |
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| source | Elektronische Zeitschriftenbibliothek - Frei zugängliche E-Journals; MDPI - Multidisciplinary Digital Publishing Institute |
| subjects | Currency Economic growth Floating exchange rates Forecasts and trends Foreign exchange rates Foreign investment Foreign investments Foreign subsidiaries Host country Manufacturing Manufacturing industry Multinational corporations Trends |
| title | How Does the Exchange Rate and Its Volatility Influence FDI to Canada? A Disaggregated Analysis |
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