As developing economies have increasingly implemented investment liberalization to attract foreign investment, its impact on multinational firms is a crucial policy question. This paper seeks to quantify the response of individual multinational firms to a reduction in investment costs in developing countries. Calibrating the firm-heterogeneity model of Eaton, Kortum, and Kramarz (2011) to match...

In a model of sequential patent races, it is examined whether or not introducing a patent law in the home country is beneficial to the firms and the society as a whole given the foreign country already offers patent protection. Before the first patent race starts, the firms and the foreign country share interests. For a given total number of firms, the welfare effect depends on the relative com...

Prior internationalization process theory has typically focused on how firms learn from foreign experience. We model, in addition, how firms identify and select valuable expansion opportunities. More specifically, we develop theory and hypotheses on how internationalizing firms travel through a value landscape using international joint ventures (IJVs): identifying, evaluating, and selecting min...

Openness and Technological Innovations in Developing Countries: Evidence from Firm-Level Surveys This paper examines international technology transfers using firm-level data across 43 developing countries. Our findings show that exporting and importing activities are important channels for the transfer of technology. Majority foreign-owned firms are less likely to engage in technological innova...

We set up a two-country, regional model of trade in financial services. Competitive firms in each country manufacture untraded consumer goods in an uncertain productive environment, borrowing funds from a bank in either the home or the foreign market. Duopolistic banks can choose their levels of monitoring of firms and thus the levels of risk-taking, where the risk of bank failure is partly bor...

To what extent do firms go abroad to access technology available in other locations? This paper examines whether and when state technical capabilities attract foreign investment in manufacturing from 1987-1993. We find that on average state R&D intensity does not attract foreign direct investment. Most investing firms are in lower-tech industries and locate in low R&D intensity states, suggesti...

In this paper we argue that foreign direct investment in the transition countries has a dynamic nature, by using firm level data for nine transition countries for the period 1996-2002. Moreover, we differentiate the sectors of activity by the degree of technology involved, using the OECD classification based on technology. By doing this, our empirical model proves that there is some heterogenei...

Empirical evidence showing that foreign affiliates perform better in almost all areas than their domestic counterparts is piling up. Yet, contrary to arguments of the public debate, it is not primarily foreign ownership which accounts for performance gaps between domestic firms and foreign affiliates. Firm-specific assets, firm characteristics, the home country of the parent firms and the trans...

We explore how firm capabilities affect the diffusion of technology brought with foreign direct investment (FDI). Using a panel dataset on Indonesian manufacturers from 1988 to 1996, we measure how the productivity of differing domestic firms responds to the entry of multinational competitors. We find that firms with investments in research and development and firms with highly educated employe...

This paper analyses the concept of linkages and studies the development and the determinants of inter-firm linkages between electronics firms in Ireland and domestic sub-suppliers using firm level data for 1982 to 1995. We discuss the concept of inter-firm linkages and the effects of linkages. We argue that the concept of linkages developed by Hirschman (1958) is an inter-sectoral concept which...