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Do intangible assets explain high U.S. foreign direct investment returns?

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  • Bridgman, Benjamin

Abstract

U.S. investors abroad receive a higher return on their assets than their counterparts that invest in the United States. I examine the degree to which excluding intangible assets and repatriation taxes from the international transactions accounts can account for this gap. Using a growth accounting framework, I find that adjusting for these exclusions cuts the gap by more than half. The overall returns gap is nearly eliminated when the adjusted FDI rates of return are applied to the overall overseas asset portfolio. The results suggest a portion of the gap is persistent.

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  • Bridgman, Benjamin, 2014. "Do intangible assets explain high U.S. foreign direct investment returns?," Journal of Macroeconomics, Elsevier, vol. 40(C), pages 159-171.
  • Handle: RePEc:eee:jmacro:v:40:y:2014:i:c:p:159-171
    DOI: 10.1016/j.jmacro.2014.03.006
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    More about this item

    Keywords

    F21; F23; F3; Returns differentials; Intangible capital; Multinational taxation;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F3 - International Economics - - International Finance

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