| Foreign direct investment (FDI) plays an important role in economic growth and development. In line with the rapid growth in FDI in the agro-food sector, more and more attention has been placed on the discussion of the determinants of FDI. There has not been a consensus on the determinants of FDI. Some of the most frequently analyzed factors affecting FDI includes: market size, relative labor costs, interest rates, import protection, exchange rates, export orientation, market structure, geographical distance, political stability, and cultural similarity. This thesis applies the knowledge-capital model to the food-processing sector by examining the determinants of U.S. outbound FDI in the food-processing sector. The results suggest a positive relationship between joint market size and U.S. FDI presence. Relative skill endowment affects FDI level negatively, which conforms to the findings in previous empirical works on all industries that skill convergence encourages U.S. outbound FDI. Exchange rate is also found to have a negative effect on FDI sales. |
