The Effect of the Exchange Rates on Investment in Mexican Manufacturing Industry

Çağlayan, Mustafa; Torres, Rebeca I. Muñoz

doi:10.1007/s11079-010-9166-0

Cited by 11 publications

(9 citation statements)

References 24 publications

(21 reference statements)

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“…According to Caglayan and Torres (2011), the depreciation of the Mexican currency resulted in more FDI inflow whilst exchange rate volatility negatively impacted on FDI especially in the export oriented sectors of the Mexican economy. Furthermore, Caglayan and Torres (2011) showed that the impact of exchange rate volatility on FDI to a larger extent was much stronger in the non-durable goods sectors of the Mexican economy during the period 1994 to 2003.…”

Section: Review Of Related Literaturementioning

confidence: 99%

“…Furthermore, Caglayan and Torres (2011) showed that the impact of exchange rate volatility on FDI to a larger extent was much stronger in the non-durable goods sectors of the Mexican economy during the period 1994 to 2003. Greenaway et al (2012) on the other hand discovered that multinational enterprises whose origin was outside the European Union (EU) were the least affected by exchange rate volatility whilst the multinational enterprises from the EU region were found to be more susceptible to exchange rates changes.…”

Section: Review Of Related Literaturementioning

confidence: 99%

See 1 more Smart Citation

FDI location and exchange rates. is there really a relationship between the two?

Tsaurai¹

2015

COC

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The exchange rate led foreign direct investment (FDI), FDI led exchange rates and feedback effect hypotheses summarise the literature around the nature of the relationship between FDI and exchange rates. So many authors on this subject over a long period have been found to generally side with of the above-mentioned hypothesis or another without a consensus. Despite this lack of consensus with regard to the exact nature of the causal relation between these two variables, what is coming out clearly from the literature is that there indeed exist a relationship between FDI and exchange rates. The lack of consensus has prompted this current study that used the ARDL (Autoregressive distributed lag)-bounds testing approach. The study revealed the existence of causality from (1) the rand value to FDI in the long run and (2) FDI to the rand value only in the short run in South Africa. The author recommends that policies which strengthen the value of the rand should be put in place in order to attract FDI in the long run. The flow of FDI into South Africa will in turn not only stabilises the value of the rand.

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Section: Review Of Related Literaturementioning

confidence: 99%

Section: Review Of Related Literaturementioning

confidence: 99%

FDI location and exchange rates. is there really a relationship between the two?

Tsaurai¹

2015

COC

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“…Second, the findings conclude that the impact of exchange rate depreciation on the total investment is positive, when exchange rate uncertainty is at low levels. Furthermore, Caglayan and Torres [8] investigate the association between exchange rate and exchange rate volatility and capital investment of Mexican manufacturing firms. They conduct a panel data analysis on the firms for the period of 1994-2003.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Exchange Rate Uncertainty on Domestic Investment: Panel Evidence from Emerging Markets and Developing Economies

Canbaloğlu¹,

Gürgün²

2018

Financial Management From an Emerging Market Perspective

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This study attempts to suggest empirical evidence about the impact of exchange rate uncertainty on the domestic investment for 25 emerging markets and developing economies (EMDEs) for the time line covering the years between 2004 and 2014. Exchange rate uncertainty is modeled by selecting one of the volatility models of GARCH(1, 1), EGARCH(1, 1), or GJR-GARCH(1, 1) for individual countries. The study aims to offer a broad point of view about the impact of exchange rate uncertainty on domestic investment through a feasible generalized least square panel data model by deeming the economic growth, real interest rate, and 2008/2009 global financial crisis (GFC). The empirical results show that the impact of exchange rate uncertainty on domestic investment for EMDEs is found to be positive and significant, which may indicate the existence of risk neutral or insensitive domestic investors to exchange rate uncertainty in these countries. On the other hand, the study also proves that the effect of economic growth is positive and significant on domestic investment, whereas the impact of GFC on domestic investment is negative and significant. However, the impact of real exchange rate on domestic investment is found to be negative but insignificant.

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“…Other studies show a negative relationship (Ojeyinka and Adegboye, 2017; Falaye, 2019;Vo and Zhang, 2019;Irene et al, 2020). Similarly, Caglayan and Torres (2011) investigate the effects of the exchange rate in the Mexican manufacturing sector from 1994 to 2003 by using fixed capital investment as an intermediate channel. They found that currency depreciation positively affects fixed investment through the export channel but a negative effect through the import channel.…”

Section: Gross Fixed Capital Formation and Manufacturingmentioning

confidence: 99%

Determinants of Growth in Manufacturing Industries: Empirical Evidence from Egypt Using the ARDL Approach

Mohamed¹

2021

IJEBA

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Purpose: This study investigates essential determinants affecting the Egyptian manufacturing sector from 1970 to 2019. Design/Methodology/Approach: The study employs annual time-series data spanning the 1970-2019 period from the databases of the World Bank. Autoregressive distributed lag approaches are employed to examine the short-and long-run relationship causality among variables. Findings: The empirical results reveal a positive and statistically significant relationship between industry value-added and gross fixed capital formation, number of workers, and foreign direct investment, respectively, while the relationship of industry value-added with the gross domestic product and total factor productivity is added being negative and statistically significant. This result is explained by other sectors that contribute more to growth in the domestic product, such as the tourism sector and the Suez Canal. Practical Implications: These findings provide a better understanding of the determinants affecting the Egyptian manufacturing sector Originality/Value: The study would help policymakers to explore the most productive Egyptian manufacturing industries and adopt economic policies that stimulate investment in the manufacturing sector to increase economic growth and exports.

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The Effect of the Exchange Rates on Investment in Mexican Manufacturing Industry

Abstract: Exchange rate volatility, Investment, External exposure, Market structure, E22,

Cited by 11 publications

References 24 publications

FDI location and exchange rates. is there really a relationship between the two?

FDI location and exchange rates. is there really a relationship between the two?

The Impact of Exchange Rate Uncertainty on Domestic Investment: Panel Evidence from Emerging Markets and Developing Economies

Determinants of Growth in Manufacturing Industries: Empirical Evidence from Egypt Using the ARDL Approach

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