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Facts And Fallacies About Foreign Direct Investment

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Author Info
Robert C. Feenstra

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Abstract

This paper begins with a summary of the major trends in foreign direct investment over the 1980-1995 period. Following that we present five fallacies, dealing with: the magnitude of foreign investment in Japan; the impact of FDI on the U.S. and Japanese trade balance; the extent to with multinational corporations control U.S. trade; the impact of exchange rate movements on foreign investment flows; and finally, the impact of FDI on welfare of the host country. The paper concludes with a further analysis of the recent trends in foreign investment, and their implications for the competition faced by U.S. firms on international markets.

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Paper provided by California Davis - Department of Economics in its series Department of Economics with number 98-04.

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Handle: RePEc:fth:caldec:98-04

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  1. Aitken, B. & Hanson, G.H. & Harrison, A.E., 1994. "Spillovers, Foreign Investment and Export Behavior," Papers 95-06, Columbia - Graduate School of Business.
    Other versions:
  2. Goodman, John B & Spar, Debora & Yoffie, David B, 1996. "Foreign Direct Investment and the Demand for Protection in the United States," International Organization, MIT Press, vol. 50(4), pages 565-91, Autumn.
  3. David E. Weinstein, 1996. "Foreign Direct Investment and Keiretsu: Rethinking U.S. and Japanese Policy," NBER Working Papers 5612, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Blonigen, Bruce A, 1997. "Firm-Specific Assets and the Link between Exchange Rates and Foreign Direct Investment," American Economic Review, American Economic Association, vol. 87(3), pages 447-65, June. [Downloadable!] (restricted)
  5. Aitken, B. & Harrison, A. & Lipsey, R.E., 1995. "Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela, and the United States," Papers 95-21, Columbia - Graduate School of Business.
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  6. Froot, Kenneth A & Stein, Jeremy C, 1991. "Exchange Rates and Foreign Direct Investment: An Imperfect Capital Markets Approach," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1191-217, November. [Downloadable!] (restricted)
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  7. Fukunari Kimura & Robert E. Baldwin, 1996. "Application of Nationality-Adjusted Net Sales and Value Added Framework: The Case of Japan," NBER Working Papers 5670, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Robert E. Lipsey, 1994. "Foreign-Owned Firms and U.S. Wages," NBER Working Papers 4927, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Brecher, Richard A. & Diaz Alejandro, Carlos F., 1977. "Tariffs, foreign capital and immiserizing growth," Journal of International Economics, Elsevier, vol. 7(4), pages 317-322, November. [Downloadable!] (restricted)
  10. Lipsey, Robert E. & Blomström, Magnus & Ramstetter, Eric, 1995. "Internationalized Production in World Output," Working Paper Series in Economics and Finance 80, Stockholm School of Economics.
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  11. Barrell, Ray & Pain, Nigel, 1999. "Trade restraints and Japanese direct investment flows," European Economic Review, Elsevier, vol. 43(1), pages 29-45, January. [Downloadable!] (restricted)
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  12. Bhagwati, Jagdish N & Dinopoulos, Elias & Wong, Kar-yiu, 1992. "Quid Pro Quo Foreign Investment," American Economic Review, American Economic Association, vol. 82(2), pages 186-90, May. [Downloadable!] (restricted)
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  1. Prema-chandra Athukorala & Sarath Rajapatirana, 2003. "Capital Inflows and the Real Exchange Rate: A Comparative Study of Asia and Latin America," Departmental Working Papers 2003-02, Australian National University, Economics RSPAS. [Downloadable!]
    Other versions:
  2. Pol Antrà s, 2003. "Incomplete Contracts and the Product Cycle," NBER Working Papers 9945, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Ugo Panizza & Ernesto Stein & Eduardo Fernandez-Arias, 2002. "Trade Agreements and Exchange Rate Disagreements," RES Working Papers 1013, Inter-American Development Bank, Research Department. [Downloadable!]
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