FDI_summary - Ewe Ghee Lim Determinants of and the...

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Ewe Ghee Lim: Determinants of, and the Relations between FDI and Growth MNC (multinational affiliates corporations): it depends on how MNC act as a parent firm, giving newer resources, human resources, Empirical findings suggest that there is a positive spillover effect empirical findings suggest that for developed nations, domestic productivity increases when the foreign firms exists. In the developing nations, the correlations is mixed. Positive effects of foreign firms presence: managing style , local firms trying to copy the technology, when a person gets employed by MNC and have their own firm, foreign technology and information Negative effects; foreign firms can adversely take over domestic market shares and lendings Determinants of spillover magnitude 1. capability to absorb the foreign technology(size of technology gap between domestic and foreign firms) 2. Host investment climate is important factor in success of FDI Liberal climate encourage establishment of export-oriented operations that are tied to the MNC’s global sourcing. Restrictive climate tends to orient FDI toward producing for the host market. FDI launched under domestic content requirements suffer from being noncompetitive internationally because they are forced to substituted expensive local indigenous goods with cheaper goods. 3. Crowding in effect: FDI can have two potential effects on domestic investments by competing in product and financial markets. MNCs may displace domestic firms, however FDI may also facilitate the expansion of domestic firms through complementarily in production and productivity spillovers. Private industries are more likely to be interested in emerging market such as India, Mexico, Spain, China, Brazil. Size of the market, the cost of labor, FDI policies. General electronic sectors are the most sensitive to the FDI policies. Quality of infrastructure, degree of
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This note was uploaded on 04/12/2008 for the course PLSC 468z taught by Professor Cutrone during the Spring '08 term at Binghamton.

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FDI_summary - Ewe Ghee Lim Determinants of and the...

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