Why developing host countries sign increasingly strict investment agreements

Eric Neumayer, Peter Nunnenkamp, Martin Roy 01 August 2014

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Conclusive evidence is still missing that signing bilateral investment treaties (BITs) and other international investment agreements helps developing host countries attract more FDI – and, yet, the number of such agreements has mushroomed. What is more, developing countries have witnessed a wave of litigation – and yet they increasingly agreed to stricter FDI-related provisions in international investment agreements, in particular with regard to investor-state dispute settlement (ISDS) mechanisms and pre-establishment national treatment (NT) of foreign investors.

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Topics:  Development International trade

Tags:  developing countries, FDI, international investment agreements

R&D internationalisation during the Global Crisis

Bernhard Dachs, Georg Zahradnik 06 July 2014

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Foreign firms’ share of total business R&D expenditure increased during the last three decades in almost all countries where data is available, but this trend stopped with the Global Crisis of 2008–2009. In most countries, R&D of foreign firms was more severely affected by the crisis than R&D of domestic firms. However, the crisis did not lead to a new global distribution of overseas R&D expenditure.

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Topics:  Global crisis Productivity and Innovation

Tags:  R&D, globalisation, multinationals, FDI, innovation, global crisis, persistence, autonomy, subsidiaries

The economic impact of inward FDI on the US

Theodore H. Moran, Lindsay Oldenski 04 March 2014

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The US is the second-largest recipient of FDI in the world, behind China, and by far the largest target for FDI among OECD countries (OECD 2013). The numbers are large ($253 billion for the US), and the gap with the next-largest in the OECD is impressive ($63 billion for the UK and $62 billion for France in 2012).

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Topics:  Productivity and Innovation

Tags:  R&D, US, productivity, wages, multinationals, FDI, spillovers

With a little help from my friends – FDI in Africa

Holger Görg, Christiane Krieger-Boden, Adnan Seric 10 December 2013

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Foreign direct investment (FDI) and the emergence of multinational firms (MNEs) have proven successful strategies for the growth performance of host countries. In recent years, developing economies have gained substantial shares of such worldwide FDI flows. Now, a “new wave of FDI” has even swept sub-Saharan Africa, one of the poorest regions of the world (Figure 1).

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Topics:  Development International trade

Tags:  Africa, FDI

Is the negative impact of FDI real? Empirical evidence from Japan

Ayumu Tanaka 20 November 2013

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The Japanese government is concerned about the so-called “hollowing out of manufacturing,” referring to the negative effects of FDI on domestic employment. A typical story is described below:

"Japanese firms face severe competition with firms in low-wage Asian countries such as China, Korea, and Taiwan. Many Japanese firms, therefore, establish their overseas subsidiaries in low-wage countries, which results in the manufacturing workers in Japan losing their jobs. To protect them, it is necessary for the government to subsidise Japanese firms."

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Topics:  International trade

Tags:  multinationals, FDI

Quid pro quo: Technology capital transfers for market access in China

Thomas Holmes, Ellen McGrattan, Edward C. Prescott 08 November 2013

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Over the past two decades China’s economy has grown rapidly and the nation has become a major destination for foreign direct investment. Surprisingly, little of China's FDI inflows come from technologically advanced, dominant players in global investment such as the US, Europe, and Japan (Prasad and Wei 2007, Branstetter and Foley 2010). Moreover, while there has been an explosion of patenting in China by domestic applicants, FDI outflows from China to the US, Europe, and Japan remain small.

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Topics:  Global economy International trade

Tags:  China, patents, FDI, intellectual property rights

Not all capital waves are alike: A sector-level examination of surges in FDI inflows

Dennis Reinhardt, Salvatore Dell'Erba 08 July 2013

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Capital flows often come in waves. An extensive literature has documented 'surges' and 'bonanzas' in capital flows (e.g. Forbes and Warnock 2012, Reinhart and Reinhart 2009, Ghosh et al. 2012). While capital flows can bring many benefits the literature has also documented the risks associated with this cyclical nature. Indeed, they can contribute to amplifying economic cycles, fuel credit booms, appreciate the real exchange rate, and can be subject to sudden reversals (Calvo et al. 2008).

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Topics:  International finance

Tags:  FDI, capital flows, surges

How big are productivity gains from FDI?

Sebnem Kalemli-Ozcan, Christian Fons-Rosen, Bent E. Sørensen, Carolina Villegas-Sanchez, Vadym Volosovych 04 June 2013

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During the decades of globalisation, flows of foreign direct investment (FDI) to both developed and emerging markets have surged in parallel with extensive policy momentum to increase FDI at the expense of debt as the major source of external financing.

This pro-FDI policy urge is justified by the perceived benefits of FDI on the host country. For example:

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Topics:  Development International trade

Tags:  productivity, FDI

Service-sector reforms enhance manufacturing productivity: Evidence from Indonesia

Victor Duggan, Sjamsu Rahardja, Gonzalo Varela 22 May 2013

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Just as Cinderella was the forgotten sister with great potential, so service-sector foreign direct investment may be the neglected sibling of trade policy. As trade and foreign direct investment regimes have become more liberalised in recent decades, tariff reductions and foreign direct investment in manufacturing have hogged the limelight while foreign direct investment in services has often remained a wallflower.

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Topics:  Development Industrial organisation

Tags:  FDI

Estimating the effect of the TPP on Japan’s growth

Yasuyuki Todo 11 May 2013

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Prime Minister Abe recently announced that Japan would participate in the Trans-Pacific Partnership negotiations, with all other Trans-Pacific Partnership parties now having accepted Japan.1 This trade demarche is viewed as a key part of ‘Abenomics’ (Petri, Plummer and Zhai 2013). Although the dye has been cast, the debate in Japan has not ended. Many Japanese are sceptical about effects of the Trans-Pacific Partnership on the Japanese economy, so this is the right moment for research-based analysis of its economic effects.

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Topics:  International trade

Tags:  FDI, Japan, foreign direct investment, Trans-Pacific Partnership, TPP

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