Flows of direct investment and their effects on investment in Canada

An accelerator-flow of funds model of investment is used to estimate the effects of direct investment abroad by Canadian firms and direct investment by foreign firms on domestic investment in Canada for the period 1957.I–1971.IV. The results show that direct investment abroad has a negative effect, whereas foreign direct investment has a positive effect on domestic investment. The latter results confirm earlier findings by Caves and Reuber (1971).     

The effects of foreign direct investment on domestic firms

This paper uses firm‐level panel data to investigate empirically the effects of foreign direct investment on the productivity performance of domestic firms in three emerging economies of Central and Eastern Europe: Bulgaria, Romania and Poland. To this end, a unique firm‐level panel dataset is used with detailed information on foreign ownership at the firm level. Two main questions are addressed in the present paper: (1) do foreign firms perform better than their domestic counterparts? (2) do foreign firms generate spillovers to domestic firms? The estimation technique in this paper takes potential endogeneity of ownership, spillovers and other factors into account by estimating a fixed effects model using instrumental variables in the general methods of moment technique for panel data. Only in Poland, do foreign firms perform better than firms without foreign participation. Moreover, for all three countries studied here, I find no evidence of positive spillovers to domestic firms, on average. In contrast, on average, there are negative spillovers to domestic firms in Bulgaria and Romania, while there are no spillovers to domestic firms in Poland. This suggests a negative competition effect that dominates a positive technology effect. JEL classification: D24, F14, O52, P31.     

浅析美国在华直接投资与中美贸易的关系

贸易和投资——世界经济全球化的两个主要推动力量,日益向着一体化的方向发展。随着经济全球化的日益深入,中美两国的经贸联系越发密切。美国是当今世界经济的主要引擎之一,其在华的直接投资对中关进出口贸易产生着举足轻重的影响。文章分析了美国在华直接投资与中关贸易的发展趋势及其特点,并在此基础上探讨了美国对华投资与中关贸易互相促进的关系。     

Why is U.S. direct investment in China so small?

While the United States is the largest source of foreign direct investment (FDI) in the world, and China is the largest FDI recipient among developing countries, U.S. direct investment (USDI) in China has been surprisingly small. This article investigates the determinants of USDI through a relative-demand model with time-series data. Evidence presented in this article indicates that the small USDI cannot be fully appreciated without understanding differences between USDI and Hong Kong direct investment (HKDI), the latter being the dominant source of FDI in China. Empirical results suggest that the USDI in China was primarily motivated by market access and that the HKDI was export oriented. The small USDI thus is a result of U.S. investors' preference for market access and China's export-promotion FDI regime, along with the troubled Sino-U.S. relations and political instabilities in China.     

The effects of foreign direct investment on private domestic investment: evidence from developing countries

The main objective of this study is to make a contribution to the empirical literature of investment by examining the effects of FDI inflows on private investment in developing host countries. We employ panel data for 91 developing host countries over the period 1970–2000 and estimate our model by a means of system generalized method of moments. The results show that FDI stimulates private domestic investment which supports the “crowd-in-hypothesis”. Moreover, after grouping countries based on their level of income, we find that the positive effects of FDI on private investment in low-income countries depend on the availability of human capital.     

Determinants of U.S. direct investment in the E.E.C.: Revisited

This paper expands upon an earlier work in this Review concerning the specification of a model to identify the determinants of U.S. direct foreign investment (DFI) in the E.E.C. Compared to earlier studies, a longer data series is used, an improved tariff discrimination proxy is employed, and ‘predicted sales’ are estimated and used as the output variable in the empirical work. A variable to capture the effect of the U.S. capital control programs is also included. The findings reaffirm the importance of market size, especially in the plant and equipment equations, as being an important determinant of DFI. Strong support was also found for the growth hypothesis. Consistent statistical support was found for the tariff discrimination hypothesis. In addition, the findings imply that a variable to capture the effects of fluctuating exchange rates should be included in future studies.     

Determinants of U.S. direct investment in the E.E.C.: Revisited again

This paper discusses the Scaperlanda-Balough comment on a previous study of mine that appeared in this Review. The Scaperlanda-Balough paper extends and improves upon my study by employing better variables to test the hypotheses. However, I offer a different interpretation of the empirical evidence they present concerning the efficacy of the U.S. controls on direct investment.     

Determinants of U.S. direct investment in the E.E.C.: Further evidence

This study attempts to identify the determinants of U.S. direct foreign investment in the E.E.C. Previous studies are examined and an alternative specification is presented. The results indicate that the size of the market, growth of the market, height of trade barriers, and lagged net plant and equipment expenditures are important. Even so, the author feels that the data is too weak to permit strong policy statements from being made, as has been done in some of the previous papers.     

The Canada U.S. free trade agreement: Competitive tradeoffs between foreign direct investment and trade

This paper assesses the impact of the Canada U.S. Free Trade Agreement on exports and foreign direct investment of processed foods. Results indicate that U.S. exports to Canada more than doubled, while Canadian exports to the U.S. nearly doubled after the implementation of the Canada U.S. Free Trade Agreement in 1989. Regression results of the covariance model on panel data show that U.S. and Canadian food processing firms appear to use both exports and foreign direct investments as complementary market access strategies. This research was supported by a grant from the Canadian Embassy. In addition, the authors thank Carolyn Dimitri of the University of Maryland for helpful comments.     

The profitability of U.K. foreign direct investment under colonialism

The effects of discrimination in favor of metropolitan direct investment in colonies on the size and composition of foreign investment there and the profits accruing therefrom have been derived with the help of a simple model. Empirical studies show that the rate of return to U.K. investment in her colonies was significantly higher than in non-British LDCs, although some doubt remains as to the extent to which this result is explained by data imperfections.     

Regulation and investment in the U.S. telecommunications industry

Reversing a two-decade deregulatory trend of telecommunications services, in 2010 U.S. regulators embarked on an aggressive regulatory agenda including, but not limited to, the regulation of high-speed Internet services under the auspices of net neutrality using utility-style regulations codified in the 1930s. Firms, regulators, and analysts feared a reduction in capital spending, contradicting established policy goals of expanding Internet availability and adoption. In this article, a difference-in-differences regression model augmented with randomization inference is applied to government data on capital spending in telecommunications. Large negative effects on investment are found. The estimated effects are robust across changes in estimation periods and model specifications, and multiple tests of the model’s assumptions lend credibility to the findings.     

U.S. foreign direct investment in Latin America and the Caribbean: a case of remittances and market size

This article investigates the effect of remittances on U.S. foreign direct investment (FDI) flows to Latin America and the Caribbean (LAC). It covers 26 countries for the period 1983–2010. The results show a positive and significant impact of remittances on U.S. FDI flows. However, this effect depends upon the level of gross domestic product (GDP) per capita of the host country. On average, the results show that increasing remittances by one standard deviation increases U.S. FDI flows by 0.44 percent a year. Also, host country demand positively affects U.S. FDI flows, which supports the market size hypothesis.     

Foreign direct investment and domestic investment in the host country: evidence from panel study

This article examines the impact of inward Foreign Direct Investment (FDI) on host countries’ domestic investment. Utilizing data from 50 countries over the period of 1970 to 2004, we find that inward FDI has a negative contemporaneous effect on domestic investment, while the cumulative effect of FDI over time tends to be positive. In addition, we separately study FDI in Developed Countries (DCs) and Less Developed Countries (LDCs). The effect of contemporaneous FDI on domestic investment is negative in DCs, and the cumulative effect of FDI is neutral. Strong evidence suggests that the contemporaneous effect of FDI on domestic investment is neutral in LDCs, while the cumulative effect of FDI is positive.     

Tax policy and investment in major U.S. macroeconomic econometric models

In an analysis of six major U.S. quarterly models, the predicted results of tax incentives for investment are found to vary widely. Differences are traced to critical specifications in investment equations. When appropriately revised investment equations are reestimated the role of tax parameters is much reduced, particularly among the high outliers, and the variance among the models is narrowed decidedly. Full model simulations of revised equations suggest that current and proposed incentives such as the investment tax credit and accelerated depreciation are not cost-effective. Increases in investment approximate only half of static tax losses, and budget deficits widen.     

Relaxing CAFE: Foreign direct investment,NAFTA and domestic product standards

This paper studies the effects of domestic product standards on the offshoring behaviour of automotive firms. In particular, we examine an important non‐tariff barrier to trade within US fuel economy policy—the Corporate Average Fuel Economy (CAFE) “two‐fleet rule.” By leveraging the removal of the two‐fleet rule upon implementation of NAFTA and exploiting a policy discontinuity based on vehicle characteristics, we present evidence that the costs of offshoring were reduced to a larger degree for varieties that were subject to US fuel economy rules. Specifically, we estimate that prices fell between 5% to 10% for varieties subject to the CAFE two‐fleet rule relative to varieties that were exempt from the rule. These effects are persistent, not present for manufacturers that did not offshore prior to NAFTA and are robust to variety‐specific trends. These effects also reconcile the post‐NAFTA differences in implied compliance costs between cars and trucks for our treatment manufacturer (Chrysler). Overall, the results highlight the potential costs of regional enforcement of otherwise location‐neutral product standards, which may act as a barrier to natural patterns of efficient specialization.     

Outward foreign direct investment and domestic innovation performance: evidence from China

The existing literature has explored the existence of reverse technology spillover through outward foreign direct investment (OFDI), which means domestic firms improve their technological innovation and productivity due to overseas investment activities. This paper aims to examine how the host country affects reverse technology spillover from OFDI. The findings show domestic innovation performance (DIP) is positively related to OFDI in developed countries while it is negatively related to OFDI in transitional and emerging markets. It is also found that financial development and human capital weaken the positive relationship between OFDI in developed countries and DIP and also weaken the negative relationship between OFDI in transitional and emerging markets and DIP. These results are further confirmed through robustness checks.     

研判中美制造业直接投资趋势

2018年以来,美国单边挑起贸易争端,频繁以国家安全为由对我国高技术产业实行严格的出口管制措施和技术封锁,中美双边制造业投资面临紧张的国内外形势。2020年新冠肺炎疫情爆发冲击全球经济体系,为中美双边制造业投资带来更大的不确定性。基于2008~2019年中美双边制造业直接投资数据的研究发现,整体来看,中美投资机制不畅通导致双边直接投资体量小,跨国运营经验不足导致中国赴美直接投资收益较低,美方加强中企赴美投资管控导致投资风险增加。短期看,中美政策风险增加导致双边投资下降,特别是我国在美投资难度加大;但长期看,世界各国分工合作、互利共赢的全球化大趋势不变,中美直接投资领域仍有较大挖潜空间。     

区域一体化与外资流入--日本在欧美的直接投资

90年代以来,区域一体化协定迅速增加。截至2003年5月,区域贸易协定(RTAs)已经多达265个(WTO,2003),其中绝大部分是在90年代签订的。由于区域协定大都带有封闭和排他的特征,这些协定的增加、范围的不断扩大和性质的变化都提出了这样的问题:区域协定是否与以贸易自由化为基础的国