It is often observed that in order to serve the domestic market, foreign firms not only export but also control domestic firms through foreign direct investment (FDI). This paper examines the effects of tariffs, production subsidies, and foreign ownership regulation on prices, outputs, profits, and welfare when both exports and FDI coexist. Cross-border ownership on the basis of both financial ...

Tax incentives offered to attract firms engaged in foreign direct investment are often tied to performance requirements such as domestic content restrictions. The tax competition literature has repeatedly shown that competition between municipalities for mobile firms tends to drive taxes to low levels. One would expect a comparable result for burdensome performance requirements. Despite this, t...

This paper investigates the two-way relationship between R&D and export activity. In particular, we concern ourselves with the question whether R&D stimulates exports and, perhaps more importantly, whether export activity leads to increasing innovative activity in terms of R&D (learning by exporting). We use two unique firm level databases for Great Britain and the Republic of Ireland and compa...

This paper develops a model of FDI with reverse imports examining the impact of FDI on the home economy through the “hollowing out” effect on the domestic employment. A foreign wage threshold exists. If the foreign wage is lower than the threshold, the home firm chooses FDI. The threshold depends on a FDI fixed cost and a demand parameter. A welfare analysis shows that another foreign wage thre...

【Keyword】China, investment promotion agency, firm-level data, sample selection 【Abstract】This paper tries to verify how the establishment of investment promotion agencies (IPAs) affects the decisions of foreign firms regarding their subsequent investment by combining firm-level data from the World Bank’s Enterprise Survey with city-level information on (IPAs) in China. After correcting for pote...

China is reforming its banking system, partially privatizing and taking on minority foreign ownership of three of its dominant ‘‘Big Four” state-owned banks. This paper helps predict the effects by analyzing the efficiency of Chinese banks over 1994–2003. Findings suggest that Big Four banks are by far the least efficient; foreign banks are most efficient; and minority foreign ownership is asso...

Tax treaties are often viewed as a mechanism for eliminating tax competition, however this approach ignores the need for bargaining over the treaty’s terms. This paper focuses on how bargaining can affect the withholding taxes set under the treaty. In a simple framework, we develop hypotheses about patterns in treaty tax rates. A key determinant for these patterns is the relative size of bilate...

A new literature on firm heterogeneity and firm level globalisation strategies has developed rapidly over the last decade. New insights on why some firms export and others do not, why some firms fail to survive in export markets and why some choose to produce overseas rather than export have been generated. This paper provides a survey and evaluation of this literature. It reviews both new theo...

The knowledge-capital model acknowledges that FDI has both vertical as well as horizontal elements. However, there is much controversy with regard to the empirical relevance of vertical FDI. We re-investigate this issue by looking at FDI at a more disaggregated level, using data on bilateral FDI in manufacturing and services for a number of industrialised countries. Our results are strongly sup...

This paper investigates whether the acquisition of a domestic establishment by a foreign owner has any effects, positive or negative, on the survival prospects and employment growth of that plant. The empirical analysis uses data from the Annual Respondents Database (ARD) for the UK electronics industry for the period 1980 to 1993. Estimating a standard hazard model including a dummy variable f...