Document Type
Article
Publication Date
5-2026
Journal / Book Title
Journal of International Economics
Abstract
This paper examines how economic policy uncertainty (EPU) in host and competing countries reshapes U.S. multinationals’ greenfield foreign direct investment (FDI). Using firm–destination level data from 2003 to 2021, we show that while host-country EPU deters investment, EPU in competing destinations attracts it through a spillover effect. We document a structural shift around 2015: as global EPU rose unevenly, the spillover effect from competitors became the dominant driver of investment decisions, supplanting the direct effect of host-country policy instability. Our findings indicate that in an era of heightened global uncertainty and risk, FDI allocation is governed by relative, not just absolute, policy stability.
DOI
10.1016/j.jinteco.2026.104252
MSU Digital Commons Citation
Kim, Daisoon and Lee, Sunhyung, "Multinational investment activity under policy uncertainty in host and competing countries" (2026). Department of Economics Faculty Scholarship and Creative Works. 71.
https://digitalcommons.montclair.edu/economics-facpubs/71
Rights
This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
Published Citation
Kim, Daisoon, and Sunhyung Lee. “Multinational Investment Activity under Policy Uncertainty in Host and Competing Countries.” Journal of International Economics, vol. 161, May 2026, p. 104252. https://doi.org/10.1016/j.jinteco.2026.104252.