Speaker: ZHAO Jing, Associate professor, Department of Marketing and Tourism Management, Wuhan University
Venue: Tencent meeting, meeting ID: 718 895 601(Please remark your name as name-school)
Abstract:
This paper studies how FDI inflows fluctuate when the host country is hit by epidemic outbreak. Based on uncertainty theory, we propose S-shaped FDI fluctuations during and after the outbreak. By analyzing historical outbreak and bilateral FDI data from 2001 to 2012, we find FDI inflows during an outbreak are 20.8% below the pre-outbreak average, and FDI inflows after the end of an outbreak are 20.1% above the pre-outbreak average within three years, which highlights the compensatory FDI after the end of epidemic and thereby confirms the S-shaped fluctuation. Furthermore, by studying the industry-level heterogeneity, we first confirm the validity of the uncertainty mechanism converting the health shock into risk factors in the real economy; secondly we find the medical conditions and institutional quality may influence the effect of epidemic on FDI inflows, in the sense that countries with poor medical conditions suffer greater decreases in FDI inflows during outbreaks, and countries characterized by poorer institutional quality do not experience compensatory FDI after an outbreak ends.