Corruption and cross-border investment by multinational firms

Motivated by previous studies on the effect of corruption on foreign direct investment, we examine the impact of a distance measure of corruption between host and source countries on cross-border direct investment and find that corruption distance deters cross-border investment. The evidence indicates that corruption distance is not as serious a deterrent of outward direct investment from more-corrupt countries as it is from less-corrupt countries. We conclude that multinational firms with the capacity to engage in bribery can disregard this activity in transparent environments, whereas multinational firms accustomed to operating in transparent environments find it difficult to overcome the administrative complexities in corrupt environments. Journal of Comparative Economics 34 (4) (2006) 839–856.     

Transnational corporations' strategies and foreign trade patterns in MERCOSUR countries in the 1990s

Market-seeking strategies predominate in the recent FDI boomin MERCOSUR countries. In the trade performance of transnationalcorporation affiliates a sort of ‘asymmetric integration’is clearly visible: they produce for the internal market and,to some extent, for the regional one, while import inputs andfinal goods from developed countries (and a significant partof these trade flows is intra-firm). Thus, even if affiliatesobtained productivity gains in the 1990s, they have not yetbeen reflected in a significant increase in exports, and evenless in extra-regional exports. Hence, the foreign direct investmentboom seemingly has not yet contributed to a better insertionof MERCOSUR countries into the world economy.     

Foreign direct investment,international trade,and firm heterogeneity

We present an asymmetric model with firm heterogeneity and foreign direct investment (FDI) from a developed country to a developing country. We found that the successful entry firms could be sorted from highest to lowest according to productivity as reimport firms, FDI firms, export firms, and domestic firms. We also found that FDI decreases (increases) the gross national income of the developed (developing) country, but it can either increase or decrease the world income according to the level of the relative propensity to spend. In addition, we demonstrated that FDI influences welfare through variations in average price, national income, and the number of types of goods.     

外资准入政策与资源优化配置

改革开放40多年以来,外商投资是中国经济发展的主要动力之一,同时也对资源优化配置产生多方面影响。以2002年《外商投资产业指导目录》的调整作为准自然实验,具体分析外资准入政策放松对资源优化配置的影响。研究表明:外资准入政策显著地增大了城市-行业层面生产率的离散度,不利于资源的优化配置;但是,从企业层面来看,外资准入政策提高了规制放松行业中企业的平均生产率;除此之外,外资准入政策在地区、企业性质和创新能力等方面的影响存在显著差异,政策效力主要体现在东部地区、非国有企业和创新能力较强的行业。因此,中国进一步扩大外资开放程度和改革外资准入政策时,应考虑到外资准入政策放松对企业生产率和资源优化配置的双重影响。     

The effects of multinationals on host economies: A CGE approach

This paper offers a new perspective regarding the effects on a host economy of the entry of multinational enterprises (MNEs). We use a computable general equilibrium (CGE) approach, through a version of the Global Trade Analysis Project (GTAP) model extended to incorporate MNEs. The analysis is applied to the Czech Republic, a country that has received substantial inflows of foreign direct investment in the last few years. A special attention has been paid to the issue of profit repatriation. We find that the negative effects of profit repatriation are sizeable, and might even offset the positive impact of the entry of MNEs.     

贸易顺差、资本流入与中国外汇储备规模增长

本文通过协整检验和Granger因果关系检验,对影响我国外汇储备规模快速增长的诸因素进行了实证分析。分析结果表明,（1）我国外汇储备规模与年出口额、外国证券投资、外商直接投资、外债还本付息额具有长期的稳定关系。（2）年出口规模与外汇储备规模之间具有单向因果关系,是造成外汇储备快速增长的主要原因。（3）外商直接投资、外国证券投资和外汇储备规模具有正向相关关系,其影响强度较弱;而外债还本付息额与外汇储备呈负向相关关系。（4）1986年～2009年间,贸易顺差对外汇储备规模增长的贡献度约为68%,而资本流入约为32%。本文基于实证分析结果认为,采取贸易项目收支平衡战略以减少外汇储备过度增长是最佳的选择。     

Effects of foreign equity participation on recipient firm exports

We offer new evidence on the role of foreign investment in domestic firms’ export decisions, both at intensive and extensive margins, using balance sheet data from a panel of manufacturing firms in India. In contrast to the existing literature, we analyse the effect of foreign investment at different levels, where the levels correspond to percentages of foreign equity. We use a selection procedure to control for the potential self-selection of firms into export participation. Though we do find that foreign investment increases a domestic firm’s likelihood to export, firms with majority foreign equity are found to serve domestic market more, once the self-selection is accounted for.     

出口平台型直接投资研究综述

出口平台型投资是经济全球化浪潮中出现的一种新型投资模式，区别于在东道国销售的水平型投资和返销母国的垂直型投资。出口平台型直接投资生产的产品主要面向第三国销售。由于传统的两国模型根本无法分析向第三国出口的出口平台型投资，该概念仅仅在最近几年才出现在经济学文献中。本文在总结现有出口平台型投资理论研究和实证研究成果的基础上，说明出口平台型投资对东道国外资流入和投资国贸易的基本影响。     

Where enterprises lead, people follow? Links between migration and FDI in Germany

Standard neoclassical models of economic integration are based on the assumptions that capital and labor are substitutes and that the geography of factor market integration does not matter. Yet, these two assumptions are violated if agglomeration forces among factors from specific source countries are at work. Agglomeration implies that factors behave as complements and that the country of origin matters. This paper analyzes agglomeration between capital and labor empirically. We use state-level German data to answer the question whether and how migration and foreign direct investment (FDI) are linked. Stocks of inward FDI and of immigrants have similar determinants, and the geography of factor market integration matters. There are higher stocks of inward FDI in German states hosting a large foreign population from the same country of origin. This agglomeration effect is confined to higher-income source countries.     

Does foreign direct investment increase exports’ productivity? Evidence from developing and emerging countries

Raising the productivity content of exports is an important issue for developing and emerging countries. What role do foreign firms play in this process? This question has not been adequately studied. We contribute to the literature by generalizing the role of foreign direct investment (FDI) in the host country’s export productivity level. Using panel data, we present new empirical evidence suggesting that FDI boosts the overall productivity level of the developing and emerging countries’ exports.     

Expropriation risk and FDI in developing countries: Does return of capital dominate return on capital?

Previously reported effects of institutional quality and political risks on foreign direct investment (FDI) are mixed and, therefore, difficult to interpret. We present empirical evidence suggesting a relatively clear, statistically robust, and intuitive characterization. Institutional factors that affect the likelihood of an abrupt and total loss of foreigners’ capital (i.e., return of capital) dominate factors that affect rates of return conditional on a strictly positive terminal investment value (i.e., return on capital). The evidence is consistent with the hypothesis that expropriation risk is most important among the available measures of different dimensions of institutional quality. A one-standard-deviation reduction in expropriation risk is associated with a 72% increase in FDI, which is substantially larger than the effects of any other dimensions of institutional quality as simultaneously estimated in our empirical models of expected FDI inflows. We show that this evidence is consistent with the predictions of a standard theory of FDI under imperfect contract enforcement and multiple dimensions of political risk.     

Pollution Control and Foreign Direct Investment in Mexico: An Industry-Level Analysis

Foreign direct investment (FDI) flows into developing countries have been increasing dramatically over the past decade. At the same time, there has been widespread concern that lax environmental standards are in part responsible for this surge. This paper revisits the question of the existence of a pollution haven effect by examining the extent to which the pollution intensity of production helps explain FDI in Mexico. We focus on pollution intensities, which are directly related to emission regulations, rather than unobservable pollution taxes and allow for substitution between capital and pollution. Examining several different pollutants, we find a positive correlation between FDI and pollution that is statistically and economically significant in the case of the highly regulated sulfur dioxide emissions. Industries for which the estimated relationship between FDI and pollution is positive receive up to 30% of total FDI and 30% of manufacturing output. Although we confirm the importance of Mexico’s comparative advantage in labor-intensive production processes, consistent with the previous literature, our results suggest that environmental considerations may matter as well for firms’ investment decisions.