Globalization of the World Economy: What Happened in 1985?
AbstractThis paper brings forward a three-country model to analyze the internationalization process in the age of globalization. It is shown that investment of one company increases not only the incentive to invest in another country for every national competitor but for third countryÂ’s companies as well. That results from the adjustment of the host countryÂ’s companies which react to their shrinking market share by reducing output and raising the price of their goods. Some host countryÂ’s companies exit the market. The results are used to explain the surge of foreign direct investment since the mid-1980s.
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 969.
Length: 38 pages
Date of creation: Mar 2000
Date of revision:
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