Multinationals and Foreign Investment in Economic by Edward M. Graham

By Edward M. Graham

This quantity examines the economics of overseas direct funding (FDI) in constructing international locations. a few chapters are theoretical in nature, others empirical, and nonetheless others are principally policy-oriented. themes coated contain even if FDI makes an self sufficient contribution to development in those countries and even if ''spillovers'' are generated by means of this investments. additionally lined are results of coverage intervention via governments on FDI flows and even if non-economic components (e.g. cultural elements) may perhaps determine as determinants of situation of FDI.

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Global economic integration has allowed MNEs to create fragmented, sequential production processes by locating their intermediate production activities in various parts of the world. 1 Imports into the USA by trade categories (percentages of total imports) 1992 1997 Intermediate inputs/final goods Percentage intermediate inputs Percentage final goods 37 63 38 62 Intra-firm/arm’s-length Percentage intra-firm (a) US MNEs (b) Foreign MNEs Percentage arm’s-length 43 17 26 57 52 30 22 48 Total imports (US$ billion) 505 748 Source: See Appendix on page 37.

2001). The literature also studies relative rates of return (Chernotsky, 1987) and, in the case of foreign investment in R&D activity, the size of the scientific base (Kuemmerle, 1999) and company strategies to tap locally-embedded expertise or to develop an organizationally complex international network for technological learning (Cantwell and Santangelo, 1999). There is also a literature that assesses the impact of FDI on the local host economy in terms of its impact on innovation (Glass and Saggi, 2002), on benefits accruing from increased competition and efficiency gains (Graham and Wada, 2001), and on economic growth (Zhang, 2001; NairWeichert and Weinhold, 2001) or, on the other hand, the lack of robust influence of FDI on growth (Carkovic and Levine, 2005).

56(1), pp. 131–53. Graham, E. M. and E. Wada (2001) ‘Foreign Direct Investment in China: Effects on Growth and Economic Performance’, Institute of International Economics Working Paper no. 01–03. Grossman, G. and E. Helpman (2002) ‘Outsourcing in a Global Economy’, NBER Working Paper no. 8728. Harrigan, J. ’, New York Federal Reserve Staff Report no. 140. Helpman, Elhanan (1984) ‘A Simple Theory of International Trade with Multinational Corporations’, Journal of Political Economy, vol. 92(3), pp.

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