The role of information in the competition for FDI under uncertainty |
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| Affiliation: | 1. Lingnan College, Sun Yat-sen University, Guangzhou, PR China;2. Carlson School of Management, University of Minnesota, Minneapolis, MN, USA;1. Department of Scienze Chimiche e Geologiche, Università di Cagliari and INSTM, Cittadella Universitaria di Monserrato, 09042, Monserrato, Cagliari, Italy;2. Department of Chemistry, Università degli Studi di Milano, Via C. Golgi, 19, 20133, Milano, Italy;3. Department of Physics, Università degli Studi di Milano, and INFN, Milano, Via G. Celoria, 16, 20133, Milano, Italy;2. Center for Sustainable Development and Smart Decision, Beijing Institute of Technology, Beijing, 100081, China;1. President, Pacific World Trade, 6970 Hillsdale Ct., Hillsdale Technical Center Suite 335, Indianapolis, IN 46250, U.S.A.;2. Project Manager, Adayana Inc., 633 Shady Creek, Greenwood, IN 46142, U.S.A.;3. Kelley School of Business, Indiana University & Indiana University Center on Philanthropy, 801 W. Michigan Street, Indianapolis, IN 46202-5151, U.S.A.;1. School of Environmental Science and Engineering, Tianjin University, Tianjin, China;2. College of Management and Economics, Tianjin University, Tianjin 300072, China;3. School of Architecture & Built Environment; Entrepreneurship, Commercialisation and Innovation Centre (ECIC), The University of Adelaide, SA 5005, Australia;1. University of São Paulo, Polytechnic School, Production Engineering Department, Av. Prof. Almeida Prado, travessa 2, n. 128, 05508070 São Paulo, SP, Brazil;2. The Institute for Applied Economic Research (Ipea), SBS Qd. 1, Bloco J, Ed. BNDES/Ipea, 11th floor, 70076-900 Brasília, DF, Brazil |
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| Abstract: | This paper mainly focuses on the role of information in the competition for FDI when host countries are not sure of the “fixed cost” differences MNEs are working with to make FDI in different countries. It is found in this paper that as the public information increases and the uncertainty declines, host countries will first provide more and more subsidies to compete for FDI, which will reduce their welfare; then after the current uncertainty has been reduced to a relatively low level, any further reduction in uncertainty will pull down their subsidies and increase their welfare. |
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