Foreign Direct Investment with Hysteresis: Short Term Rescue or Long Term Sentence?
Foreign direct investment is often regarded by countries with balance of payments problems as a potential source of salvation. The consequences of a rise in foreign direct investment are analysed within a two-country, four-product, six-asset small macro model and is shown to have two distinct and offsetting effects. The first effect improves the balance of payments and prevents devaluation. The second effect depreciates the real exchange rate and raises the return on capital. In both cases net international debt increases. If foreign direct investment is withdrawn, a consequence of there being multiple equilibria in the model is that the domestic country may get stuck in a debt-trap. Similarly hysteric behaviour is displayed by the real exchange rate.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 2 (1998)
Issue (Month): 1 (Summer)
|Contact details of provider:|| Web page: http://www.ekonomia.ucy.ac.cy/|
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ekn:ekonom:v:2:y:1998:i:1:p:29-46. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Managing Editor)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.