The Effect of COVID-19 on Foreign Direct Investment

Abstract

This study empirically examines how the coronavirus disease (COVID-19) has impacted foreign direct investment (FDI). The authors find heterogeneous effects of COVID-19 on FDI by sector and entry mode. The severity of COVID-19 in host countries negatively affected both greenfield FDI and cross-border mergers and acquisitions in the manufacturing sector. But the situation of home countries did not seem to matter. Greenfield FDI in the service sector was affected by the situation in both host and home countries.