Bibliografía: p. 18-21.

1. Introduction -- 2. Corporate valuation and real options -- 3. Empirical analysis -- 3.1. Financial competitiveness. 3.2. Determinants of financial competitiveness. 3.3. financial competitiveness and incentives to invest -- 4. Conclusion -- References -- Apendix A: Entry decision under uncertainty and competition -- B: Calculating the market value of FDI stocks.

In this paper an index of financial competitiveness is calculated that corresponds to the market-to-book ratio of inward FDI stocks. For a panel of five advanced economies from 1980 to 2006 it is shown that price competitiveness, stable inflation rates and registered patents have a positive impact on the index. Institutional factors like EMU membership or Anglo-Saxon legislation also play a role. Financial competitiveness in turn encourages FDI inflows whereas it benefits fixed investment relative to M&A. There is also some evidence that an innovative environment accelerates investment decisions by promoting competition among investors.