Foreign Direct Investment

The 1990s saw global flows of foreign direct investment increase some sevenfold, spurring economists to explore FDI from a micro- or trade-based perspective.Foreign Direct Investmentis one of the first books to analyze the macroeconomics of FDI, treating FDI as a unique form of international capital flow between specific pairs of countries. By examining the determinants of the aggregate flows of FDI at the bilateral, source-host-country level, Assaf Razin and Efraim Sadka present the first systematic global analysis of the singular features of FDI flows. Drawing on a wealth of fresh data, they provide new theoretical models and empirical techniques that illuminate the vital country-pair characteristics that drive these flows. Uniquely,Foreign Direct Investmentexamines FDI between developed and developing countries, and not just between developed countries. Among many other insights, the book shows that tax competition vis-agrave;-vis FDI need not lead to a "race to the bottom."Foreign Direct Investmentis an essential resource for graduate students, academics, and policy professionals.

Assaf Razin and Efraim Sadka are the authors of "Labor, Capital, and Finance". Razin is the Bernard L. Schwartz Chair for the Study of Global Competitive Markets at Tel Aviv University, the Friedman Professor of International Economics at Cornell University, and a research fellow at the NBER, CEPR, and CESifo. Sadka is the Henry Kaufman Professor of International Capital Markets at Tel Aviv University and a research fellow at CESifo and IZA.

List of Figures	p. ix
List of Tables	p. x
Preface	p. xi
Overview	p. 1
Channels of International Capital Flows	p. 1
Micro-Level Studies	p. 5
Macro-Finance Studies	p. 6
Scope and Purpose	p. 8
Bilateral FDI Flows	p. 9
Roadmap	p. 9
Foreign Direct Investors and Liquidity Shocks
Foreign Direct Investment and Foreign Portfolio Investment: Theory	p. 15
Introduction	p. 15
The Model	p. 18
Management and Efficiency	p. 19
Liquidity Shocks and Resale Prices	p. 20
Ex-Ante Choice between FDI and FPI	p. 22
Expected Value of FDI	p. 22
Expected Value of FPI	p. 23
FDI and FPI	p. 24
Market Equilibrium	p. 24
Allocation of Investors between FDI and FPI	p. 24
Probability of Early Withdrawals	p. 27
Welfare Analysis	p. 28
Extension: Aggregate Liquidity Shocks	p. 29
Conclusion	p. 30
Derivation of Figure 2.1	p. 31
Foreign Direct Investment and Foreign Portfolio Investment: Evidence	p. 34
Introduction	p. 34
Data	p. 34
The Econometric Model	p. 35
Results	p. 38
Conclusion	p. 39
Foreign Direct Investment with Threshold Barriers: Theory
Foreign versus Domestic Direct Invesment: Cream-Skimming	p. 43
Introduction	p. 43
FDI and Skimming High-Productivity Firms	p. 44
FPI Inflows versus FDI Inflows	p. 48
Gains to the Host Country	p. 48
The Size of Investment in Capacity in the Host Country	p. 50
Conclusion	p. 51
FDI Flows with Endogenous Domestic Wages: Heterogeneous Firms	p. 53
Introduction	p. 53
Wage Determination	p. 53
M&A and Greenfield Investments	p. 56
Conclusion	p. 59
Some Comparable Statics Derivations	p. 59
Reconciliation of the International Flow Paradox according to Lucas	p. 61
Country-Specific Aggregate Shocks: Representative Firm	p. 63
Introduction	p. 63
Country-Specific Productivity Shocks	p. 64
Conflicting Effects of Source- and Host-Country Productivity Shocks	p. 65
Conclusion	p. 69
Foreign Direct Investment with Threshold Barriers: Empirics
Overview of the Econometric Equations	p. 73
Introduction	p. 73
The Heckman Selection Model	p. 73
The Tobit Model	p. 76
Conclusion	p. 77
Application to a Baseline Sample: OLS, Tobit, and the Heckman Selection Models	p. 79
Introduction	p. 79
Data and Variables	p. 79
Estimation	p. 80
Evidence for Fixed Costs	p. 85
Conclusion	p. 88
Productivity Shocks	p. 89
Introduction	p. 89
Data	p. 90
Empirical Evidence	p. 91
Conclusion	p. 97
Source and Host Corporate Tax Rates	p. 99
Introduction	p. 99
Source and Host Taxation	p. 100
Empirical Evidence	p. 102
Conclusion	p. 106
Basic Principles of International Taxation of Capital Income	p. 106
Policy in a Globalized Economy
Tax Competition and Coordination	p. 111
Introduction	p. 111
A Source-Host Country Model of Taxes and Public Goods	p. 112
Production	p. 112
Private Consumption	p. 114
Government	p. 116
Tax Competition	p. 117
Tax Coordination	p. 118
Conclusion	p. 122
Epilogue	p. 124
Notes	p. 127
Bibliography	p. 135
Index	p. 141
Table of Contents provided by Ingram. All Rights Reserved.

What is included with this book?

The New copy of this book will include any supplemental materials advertised. Please check the title of the book to determine if it should include any access cards, study guides, lab manuals, CDs, etc.

The Used, Rental and eBook copies of this book are not guaranteed to include any supplemental materials. Typically, only the book itself is included. This is true even if the title states it includes any access cards, study guides, lab manuals, CDs, etc.

FREE SHIPPING

Amazon no longer offers textbook rentals. We do!

Foreign Direct Investment

Summary

Author Biography

Table of Contents

Supplemental Materials