On the Role of Local Content Requirement in Defusing the Threat of Quid-Pro-Quo FDI
We analyze local content requirement (LCR) and tariff in a two-country model of vertical market-structure with endogenous foreign direct investment (FDI). The foreign firm chooses whether to export or to undertake FDI. The host country anticipates the potential for FDI and selects tariff with or without LCR rate accordingly. Without LCR, the FDI imposes a threat on the host country and the threat exerts a tariff-liberalizing pressure. This FDI is often coined as quid-pro-quo FDI in the literature. In contrast, we show that with LCR the host government can defuse the threat of quid-pro-quo FDI
|Date of creation:||11 Aug 2004|
|Date of revision:|
|Contact details of provider:|| Phone: 1 212 998 3820|
Fax: 1 212 995 4487
Web page: http://www.econometricsociety.org/pastmeetings.asp
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kala Krishna & Motoshige Itoh, 1988.
"Content Protection and Oligopolistic Interactions,"
Review of Economic Studies,
Oxford University Press, vol. 55(1), pages 107-125.
- Hollander, Abraham, 1987. "Content protection and transnational monopoly," Journal of International Economics, Elsevier, vol. 23(3-4), pages 283-297, November.
- Kokko, Ari & Blomstrom, Magnus, 1995.
"Policies to encourage inflows of technology through foreign multinationals,"
Elsevier, vol. 23(3), pages 459-468, March.
- Magnus Blomstrom & Ari Kokko, 1993. "Policies to Encourage Inflows of Technology Through Foreign Multinationals," NBER Working Papers 4289, National Bureau of Economic Research, Inc.
- Carl Davidson & Steven J. Matusz & Mordechai E. Kreinin, 1985. "Analysis of Performance Standards for Direct Foreign Investments," Canadian Journal of Economics, Canadian Economics Association, vol. 18(4), pages 876-90, November.
- Paul Wonnacott & Ronald J. Wonnacott, 1982. "Free Trade between the United States and Canada: Fifteen Years Later," Canadian Public Policy, University of Toronto Press, vol. 8(s1), pages 412-427, October.
- Lopez-de-Silanes, Florencio & Markusen, James R. & Rutherford, Thomas F., 1996. "Trade policy subtleties with multinational firms," European Economic Review, Elsevier, vol. 40(8), pages 1605-1627, November.
- S. Lael Brainard, 1993. "A Simple Theory of Multinational Corporations and Trade with a Trade-Off Between Proximity and Concentration," NBER Working Papers 4269, National Bureau of Economic Research, Inc.
- Qiu, Larry D. & Tao, Zhigang, 2001. "Export, foreign direct investment, and local content requirement," Journal of Development Economics, Elsevier, vol. 66(1), pages 101-125, October.
- Konishi, Hideo & Saggi, Kamal & Weber, Shlomo, 1999. "Endogenous trade policy under foreign direct investment," Journal of International Economics, Elsevier, vol. 49(2), pages 289-308, December.
- Lahiri, S & Ono, Y, 1997.
"Foreign Direct Investment, Local Content Requirement, and Profit Taxation,"
ISER Discussion Paper
0438, Institute of Social and Economic Research, Osaka University.
- Lahiri, Sajal & Ono, Yoshiyasu, 1998. "Foreign Direct Investment, Local Content Requirement, and Profit Taxation," Economic Journal, Royal Economic Society, vol. 108(447), pages 444-57, March.
- Gene M. Grossman, 1981. "The Theory of Domestic Content Protection and Content Preference," The Quarterly Journal of Economics, Oxford University Press, vol. 96(4), pages 583-603.
- Bhagwati, Jagdish N. & Brecher, Richard A. & Dinopoulos, Elias & Srinivasan, T. N., 1987. "Quid pro quo foreign investment and welfare : A political-economy-theoretic model," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 127-138, October.
When requesting a correction, please mention this item's handle: RePEc:ecm:feam04:641. 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: (Christopher F. Baum)
If references are entirely missing, you can add them using this form.