Migration of Firms, Home Bias and the Geographical Distribution of Growth
Abstract
Foreign investment and the activity of foreign firms can have a substantial effect on an economy. This study examines the short run and long run effects of the movement of locally owned firms from a developed country to an undeveloped country on the output and growth rate of each in the presence of home bias. The paper analyzes the direction of movement of firms over time, firm ownership, GDP, GNP, wages and long run growth rates using a model in which the source of growth is the increase in the number of firms (which produce with decreasing marginal productivity). Various government policies towards the entry of foreign firms are examined and it is found that for the undeveloped country harsher policies towards entering firms lead to better results in the long run. Counter-policies are briefly discussed.Download Info
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Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c011_038.Length: 32 pages
Date of creation: Jun 2006
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Handle: RePEc:deg:conpap:c011_038
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Keywords:This paper has been announced in the following NEP Reports:
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References
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