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The Provision Of Public Inputs And Foreign Direct Investment

Author

Listed:
  • DEREK K. KELLENBERG

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.

Suggested Citation

  • Derek K. Kellenberg, 2007. "The Provision Of Public Inputs And Foreign Direct Investment," Contemporary Economic Policy, Western Economic Association International, vol. 25(2), pages 170-184, April.
  • Handle: RePEc:bla:coecpo:v:25:y:2007:i:2:p:170-184
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    References listed on IDEAS

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    5. Markusen, James R. & Venables, Anthony J., 1999. "Foreign direct investment as a catalyst for industrial development," European Economic Review, Elsevier, vol. 43(2), pages 335-356, February.
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    9. Clarida, Richard & Findlay, Ronald, 1994. "After Maastricht: Public Investment, Economic Integration and International Capital Mobility," Economica, London School of Economics and Political Science, vol. 61(243), pages 319-329, August.
    10. Morrison, Catherine J & Schwartz, Amy Ellen, 1996. "State Infrastructure and Productive Performance," American Economic Review, American Economic Association, vol. 86(5), pages 1095-1111, December.
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    12. Andrew F. Haughwout, 2001. "Infrastructure and social welfare in metropolitan America," Economic Policy Review, Federal Reserve Bank of New York, issue Dec, pages 1-16.
    13. Martin, Philippe & Rogers, Carol Ann, 1995. "Industrial location and public infrastructure," Journal of International Economics, Elsevier, pages 335-351.
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    Citations

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    Cited by:

    1. Fritz Breuss & Peter Egger & Michael Pfaffermayr, 2010. "Structural funds, EU enlargement, and the redistribution of FDI in Europe," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(3), pages 469-494, September.
    2. Peter Egger & Simon Loretz & Michael Pfaffermayr & Hannes Winner, 2006. "Corporate Taxation and Multinational Activity," CESifo Working Paper Series 1773, CESifo Group Munich.
    3. Pao-Li Chang & Chia-Hui Lu, 2010. "Risk, Learning, and the Technology Content of FDI: A Dynamic Model," Working Papers 30-2010, Singapore Management University, School of Economics.
    4. Hemmer, Hans-Rimbert & Krüger, Ralf & Seith, Jennifer, 2006. "Ausländische Direktinvestitionen: Flankierende Maßnahmen des Staates," Discussion Papers in Development Economics 36, Justus Liebig University Giessen, Institute for Development Economics.
    5. Chang, Pao-Li & Lu, Chia-Hui, 2012. "Risk and the technology content of FDI: A dynamic model," Journal of International Economics, Elsevier, vol. 86(2), pages 306-317.
    6. Basile, Roberto & Castellani, Davide & Zanfei, Antonello, 2008. "Location choices of multinational firms in Europe: The role of EU cohesion policy," Journal of International Economics, Elsevier, vol. 74(2), pages 328-340, March.
    7. Tripathi, Sabyasachi & Kumar, Shamika, 2016. "Determinants of firm location choice in metropolitan cities in India: A binary Logit model analysis," MPRA Paper 73995, University Library of Munich, Germany.
    8. repec:rom:terumm:v:12:y:2017:i:3:p:45-62 is not listed on IDEAS
    9. Rajesh Chakrabarti & Krishnamurthy Subramanian & Sesha Meka & Kuntluru Sudershan, 2013. "Infrastructure and FDI: Evidence from district-level data in India," Working papers 130, Indian Institute of Management Kozhikode.

    More about this item

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • H4 - Public Economics - - Publicly Provided Goods
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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