The Provision Of Public Inputs And Foreign Direct Investment
Abstract"A small open economy model is developed that incorporates direct and indirect effects on multinational location decisions associated with public input provision. It is shown that when agglomeration externalities are present in local intermediate goods markets, public input provision can affect multinational firms directly by lowering the fixed costs of production and indirectly by decreasing the costs of intermediate inputs, but growth is contingent on achieving a critical mass of investment. It is further shown that the effectiveness of a policy of public input provision over a policy of subsidy incentives is critically dependent on key market parameters in the host country". ("JEL" F2, H4, O1) Copyright No Claim to Original U.S. Government Works.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Contemporary Economic Policy.
Volume (Year): 25 (2007)
Issue (Month): 2 (04)
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Find related papers by JEL classification:
- F2 - International Economics - - International Factor Movements and International Business
- H4 - Public Economics - - Publicly Provided Goods
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
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