Domestic entry, optimum-welfare and maximum-revenue tariffs

In this paper, we examine the ranking of the maximum-revenue tariff and the optimum-welfare tariff under a linear Cournot oligopoly model without and with free entry of domestic firms. We demonstrate that in a regulated entry oligopoly with asymmetric costs, when the marginal cost of the domestic firms exceeds a critical value, the maximum-revenue tariff is higher than the optimum-welfare tariff. We then show that under free entry of domestic firms with asymmetric costs, when the fixed cost gets larger and the domestic firms become fewer, the difference between the optimum-welfare tariff and the maximum-revenue tariff becomes larger.     

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.     

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。     

Foreign direct investment under oligopoly: Profit shifting or profit capturing?

In this paper a model of taxation of foreign source corporate income is developed when the output market is not perfectly competitive. Profit shifting policies, similar to those in the new trade literature, are also present in the case of foreign direct investment (FDI). There are, however, important differences to the new trade theory since in case of FDI, (i) corporate taxation and double taxation relief are the policy instruments rather than output or revenue taxes, (ii) countries are not symmetric in the sense that the host country has the first right to tax the multinational's profit and the home country reacts by providing double taxation relief, and (iii) output but not corporate taxation is specific to imperfectly competitive industries. It is argued that (a) variants of a tax credit are analogous to export subsidies, (b) when the home country operates a tax credit system the host country's incentive to capture the multinational's profit is bounded under imperfect competition, (c) when the host country offers a tax holiday the home country should imitate this policy, and (d) in the presence of perfect competitive industries, double taxation relief is a good instrument to target imperfectly competitive industries.     

Tax competition with heterogeneous firms

A model of tax competition in which firms earn rents is described. The size of these rents, coupled with the degree to which the firms are foreign-owned, determine the equilibrium tax rates. The existence of rents significantly alters some generally accepted results involving the possibility of a Pareto-improving common tax rate and the underprovision of publicly provided goods.     

Local linkages: The interdependence of foreign and domestic firms in Ireland

This paper contributes to the literature on backward linkages—the degree of localization in input usage, focusing on the potential interdependence between foreign and domestic producer firms. Drawing on Irish sectoral data during 2000–2013, our main objective is to empirically examine how foreign and domestic producer firms' backward linkages might dynamically influence each other, and the extent to which they respond to export intensity and productivity levels from the two groups of firms. We find an interesting asymmetric interdependence pattern: (1) domestic firms' backward linkages are not impacted by the backward linkages of foreign firms; (2) more robust backward linkages of domestic firms can potentially induce more backward linkages from foreign firms; and (3) domestic firms' productivity shocks could generate a dynamic crossover impact on foreign firms' backward linkage status, but similar shocks originating from foreign firms generate little crossover impact on domestic firms’ backward linkage status. Our result on interdependent local linkages points to a potentially important role for domestic-to-domestic backward linkage formation in promoting foreign-to-domestic backward linkages.     

Ranking the optimum tariff and the maximum revenue tariff in vertically related markets

This paper firstly shows that in a vertically related industry with either domestic upstream monopolist or foreign upstream monopolist, when the upstream firm adopts uniform input pricing, the optimum-welfare tariff is higher than the maximum-revenue tariff, if the number of foreign competitors is sufficiently large. Secondly, when domestic upstream monopolist adopts discriminatory input pricing, the maximum-revenue tariff is higher than the optimum-welfare tariff. Thirdly, when foreign upstream monopolist adopts discriminatory input pricing, the optimum-welfare tariff will exceed the maximum-revenue tariff if the sizes of domestic and foreign firms become more unequally distributed.     

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.     

Trade liberalization, heterogeneous firms and the soft budget constraint

We analyze the interaction between the soft budget constraint (SBC) and international trade by placing Segal’s (1998) SBC model within Melitz’s (2003) framework of international trade with heterogeneous monopolistically competitive firms. As in Segal’s model, SBC may result in moral hazard. The opening to international trade adds another sort of inefficiency. Some firms that would have become exporters in the absence of SBC choose to apply low effort and not export in order to extract a subsidy from the government. This effect takes place when the trade costs are sufficiently low. Overall, however, trade liberalization reduces inefficiencies generated by SBC. The number of firms subject to moral hazard SBC decreases, aggregate effort level increases and aggregate profits lost due to SBC-induced sub-optimal effort decline as trade costs decrease.     

Does foreign ownership matter?

The paper both compares productivity of Russian firms that have foreign direct investments with productivity of fully domestically owned firms and analyses spillovers from foreign‐owned firms to domestic firms. Foreign firms are found to be more productive than domestic ones, but productivity of the former is negatively affected by slow progress of reforms in the regions where they operate. It is also found that there are positive spillovers from foreign‐owned firms to domestic firms in the same industry, but negative effects on domestic firms that are vertically related to foreign‐owned firms. The stock of human capital in regions where foreign firms operate is one of the factors which help domestic firms to benefit from the entry of foreign firms.     

Ownership advantages,home production,foreign production and exports of direct investing firms—Some evidence from austrian firms

This paper formulates a simple model of a monopolistic, horizontally integrated, multinational firm with multiplant economies of scale generated by inputs with public good characteristics. The econometric analysis of the model conducted with a sample of Austrian firms points to a substitutive relationship of foreign production and home production with foreign production significantly lowering exports. The estimation results, however, indicate in accordance with the economic model that multiplant economies of scales significantly lower the magnitude of substitution. Holding exports constant a complementary relationship between home production and foreign production would appear indicating that substitution would be much higher in the absence of multiplant economies of scale.     

外商直接投资、技术溢出与相对工资差距

本文从技术溢出的角度考察了外商直接投资对相对工资差距的影响。FDI主要通过两种技术溢出渠道作用于相对工资差距：其一为FDI引致的进口贸易而产生的技术溢出,其二为外资企业在当地从事生产、经营活动而产生的技术溢出。基于我国省际面板数据的实证研究分析表明：FDI的两种技术溢出渠道均扩大了我国的相对工资差距,但存在区域差异。     

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。     

Foreign Debt,Foreign Direct Investment and Volatility

We investigate how foreign debt and foreign direct investment (FDI) affect the growth and welfare of a stochastically growing small open economy. First, we find that foreign debt influences the growth of domestic wealth by lowering the cost of capital, while FDI affects the country's welfare by providing an additional source of permanent income. Second, a decline in domestic investment may improve domestic welfare as FDI replaces the gap. Even when the welfare deteriorates, its magnitude is mitigated, leaving more room for discretionary fiscal policy. Third, a fiscal policy aimed to stabilize domestic output fluctuations needs to be conducted not to crowd out the welfare benefit of FDI too much. Fourth, an economy with both types of foreign capital experiences wider welfare swings by external volatility shocks than the one with foreign debt alone, while the welfare effects from domestic volatility shocks are mitigated. The welfare effects of fiscal shocks are much smaller with both types of foreign capital. Lastly, the first-best labor income tax covers the government absorption by the labor's share of total output, and the capital income tax covers the rest. Investment is penalized or subsidized depending on the social marginal cost-gain differential.     

Host country's governance and the size of foreign investors

We find that smaller foreign investors are more sensitive to the quality of host country's governance than larger investors. This may be the case as smaller foreign firms have less bargaining power and are more sensitive to uncertainty and risk.     

The importance of clusters for spillovers from foreign direct investment and technology sourcing

This paper examines the link between cluster development andinward foreign direct investment. The conventional policy approachhas been to assume that inward foreign direct investment (FDI)can stimulate significant clustering activity, thus generatingsignificant spillovers. This paper, however, questions thisand shows that, while clusters can generate significant productivityspillovers from FDI, this only occurs in pre-existing clusters.Further, the paper demonstrates that foreign-owned firms thatenter clusters also appropriate spillovers when domestic firmsundertake investment, raising the possibility that clustersare important locations for so called technology, or knowledgesourcing activities by MNEs.     

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.      

FDI into transition economies

The article explores the determination of foreign direct investment (FDI) into the Balkan transition economies – Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia, Montenegro, Romania and Serbia. Detailed FDI inflows to Southeast Europe are analysed to determine the main differences in the volume, timing and sectoral structure of FDI within the region and in comparison to the Central East European countries. A gravity model for all transition economies during 1990–2011 is then estimated to assess whether the factors driving FDI to the Western Balkans are different. They are found to be so; even when the size of their economies, distance from the source economies, institutional quality and prospects of EU membership are taken into account, Western Balkans countries receive less FDI than other transition countries. These issues are of policy relevance for the Balkan economies and ought to contribute to the current debate on the ‘new growth model’.     

Economic Integration and FDI: An Empirical Analysis of Foreign Investment in the EU and in Central and Eastern Europe

Recent evidence suggests that regional economic integration provides an important stimulus not only to trade, but also to FDI. In contrast, the available theory on FDI does not yet provide empirically testable propositions on the effects of concurrent trade and investment liberalisation. Moreover, given the limits of simulation models, which rely heavily upon parameter choice, in assessing the impact of such liberalisation, there is a need for empirical analysis to identify the principal features of FDI. This paper uses a gravity model approach to assess the impact of the deepening integration between the EU and the CEECs on FDI flows in terms of three key issues. First, we provide systematic estimates of the expected long-term level of FDI in the CEECs. Second, we investigate whether FDI in the CEECs, on the one hand, and source country exports and imports, on the other hand, are complements or substitutes. Finally, we enquire whether an increase in the attractiveness of the CEECs to foreign investors has affected the magnitude of FDI going to other European countries.