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FDI policies under shared factor markets

In: Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy

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  • Amy Jocelyn Glass
  • Kamal Saggi

Abstract

We examine the consequences of foreign direct investment (FDI) policies in a general equilibrium setting with several oligopolistic industries. By shifting labor demand across countries, FDI raises the wage in the host country and lowers the wage in the source country, thereby raising profits of source country firms at the expense of host country firms. The extent of cross-ownership of firms, the relative number of firms and the relative supply of skilled labor alter the impact of FDI policy on national welfare. The tension between profits and wages determines whether the optimal policy is designed to encourage FDI.

Suggested Citation

  • Amy Jocelyn Glass & Kamal Saggi, 2023. "FDI policies under shared factor markets," World Scientific Book Chapters, in: Kamal Saggi (ed.), Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, chapter 24, pages 543-566, World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789813233027_0024
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    More about this item

    Keywords

    International Technology Transfer; Multinational Firms; Trips; Foreign Direct Investment; Oligopolistic Competition; Vertical Contracts; Intellectual Property Rights;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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