In their zeal to attract foreign investment, governments in emerging markets offer tax breaks and subsidies that can cost those millions. Simultaneously, they enforce rules to protect inefficient domestic companies and to ensure that local economies benefit from the new business. The article finds that these incentives and restrictions are...
Can you make money in India and China? That's the central question of Part II of "Billions of Entrepreneurs." The answer: maybe. Author Tarun Khanna shows that companies have made money in both countries, but that foreign firms in particular have found profits challenging. In India, local...
By definition, all multinational companies are now familiar with the globalisation phenomenon, and few organisations have yet to consider the benefits of internationalising their production and sales operations. Now this interest has spread to the emerging markets of Africa, the Middle East, and Eastern Europe. In these regions deregulated or...
Think you know the basics of the business relationship between China and the U.S.? From safety recalls to the trade imbalance, issues surrounding the two countries' business dealings have been in the news a lot lately. Nonetheless, the Kiplinger Business Resource Center has an eye-opening article dispelling ten common misconceptions...
Does environmental regulation impair international competitiveness of pollution-intensive industries to the extent that they relocate to countries with less stringent regulation, turning those into "Pollution havens"? This hypothesis is tested using panel data on outward Foreign Direct Investment FDI flows of various industries in the German manufacturing sector and account...
This paper examines three topics: how to investigate the impact of manufacturing FDI Foreign Direct Investment on a developing country host economy, how to search for externalities and spillovers and identify the channels and mechanisms through which spillovers take place, and how to evaluate the question of whether host governments...
Don't make the mistake of calling a company global when it's really just international -- or even worse, saying a company is multinational when it's really transnational! For convenience, it's common to use the umbrella term international business to describe business activities that extend past the borders of a company's...
The authors have developed a framework in which the host country productivity has a positive effect on the intensive margin the size of FDI flows, but only an ambiguous effect on the extensive margin the likelihood of FDI flows to occur. The source-country productivity has a negative effect on the...
We examine a foreign firm's choice between exporting and Foreign Direct Investment FDI under country-specific cost uncertainty. Unlike exporting, FDI exposes foreign and home firms to the common shock. This results in the correlation of strategies which harms firms. However, the exposure to common shocks also benefits firms by enabling...
This paper distinguishes different "Qualities" of FDI Foreign Direct Investment to re-examine the relationship between FDI and growth. The authors use 'Quality' to mean the effect of a unit of FDI on economic growth. However, this is difficult to establish because it is a function of many different country and...
This paper distinguishes different "Qualities" of FDI Foreign Direct Investment to re-examine the relationship between FDI and growth. The 'quality' is used to mean the effect of a unit of FDI on economic growth. However, this is difficult to establish because it is a function of many different country and...
This paper investigates tax/subsidy competition for FDI Foreign Direct Investment between countries of different size when a welfare-maximizing and relatively inefficient public firm is the incumbent in the largest market. First, it analyze how the presence of a public firm affects the investment decision of a multinational operating in the...
In this paper, the author examines the macroeconomic impact of inward FDI Foreign Direct Investment in Japan. From a general equilibrium point of view of the macroeconomy, probably the most important host country benefit of inward FDI is improvements in productivity caused by the inflow of managerial resources. In the...
It is commonly believed that accumulation of Human Capital HC and availability of physical and financial capitals are among the major determinants of economic growth. In a globalised world, where factors of production are increasingly mobile, the process of domestic accumulation of HC might be affected in several ways through...
This paper investigates the role of economic and political volatility in the process of corporate tax-rate determination. The paper is based on a theoretical framework that allows for the ability of multinational firms to choose the optimal timing of foreign investment and to shift profits by transfer pricing, and provides...
This paper considers a new-product firm's choice between exporting and Foreign Direct Investment FDI to access foreign markets. It is found that, when quality is unknown to buyers, the firm may choose FDI over exporting to signal quality, even though FDI is a costlier mode of access than exporting. Then...
This paper examines the effectiveness of foreign aid and foreign direct investment in the Czech Republic, Estonia, Hungary, Latvia, Lithuania and Poland. The model includes the labor force, capital stock, foreign aid and foreign direct investment, and is estimated using pooled annual time series data from 1993 to 2002. Before...
One prominent phenomenon in the global economy of the last two decades is booming cross-border flows of Foreign Direct Investment FDI. FDI inflows have grown faster than world income since the 1960s, and MultiNational Corporations MNCs now account for about 70 percent of world trade, and the sales of their...
What is the effect of a strengthening of Intellectual Property Rights IPR protection by developing countries on local imitation and inflows of Foreign Direct Investment FDI? This paper addresses this question both theoretically and empirically. On the theoretical side, a North-South product cycle model is developed in which Northern innovation,...
We study the determinants of capital intensity and technology content of foreign direct investment. For this we use sectoral industry data on U.S. foreign investment abroad, and data on host countries' institutional characteristics, like protection of property rights, labor standards and constitutional arrangements. In our regressions we find that better...
