Subsidy Competition for FDI: Fierce or Weak?
The objective of this paper is to empirically assess the recently introduced models of subsidy competition based on the classical oligopoly theories, using both cross-sectional and panel data. Three crucial scenarios (including coordination, weak competition, and fierce competition) are tested employing OLS, iteratively re-weighted least squares, fixed effects, and Blundell-Bond estimator. The results suggest that none of the scenarios can be strongly supported—although there is some weak support for cooperation—, and thus that empirical evidence is not in accordance with the tested models. Further, it seems that by means of FDI incentives countries try to compensate foreign investors for high wages or low productivity of their citizens.
|Date of creation:||Feb 2009|
|Date of revision:||Feb 2009|
|Contact details of provider:|| Postal: Opletalova 26, CZ-110 00 Prague|
Phone: +420 2 222112330
Fax: +420 2 22112304
Web page: http://ies.fsv.cuni.cz/
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.:
- Maria Caterina Bramati & Christophe Croux, 2007. "Robust estimators for the fixed effects panel data model," Econometrics Journal, Royal Economic Society, vol. 10(3), pages 521-540, November.
- White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
- Tomáš Havránek, 2009.
"The supply of foreign direct investment incentives: subsidy competition in an oligopolistic framework,"
Prague Economic Papers,
University of Economics, Prague, vol. 2009(2), pages 131-155.
- Havranek, Tomas, 2008. "The Supply of Foreign Direct Investment Incentives: Subsidy Competition in an Oligopolistic Framework," MPRA Paper 10770, University Library of Munich, Germany.
- N. De Liso & G. Filatrella, 1999. "On technology competition," Working Papers 337, Dipartimento Scienze Economiche, Universita' di Bologna.
- Papageorgiou, Chris, 2002. "Technology Adoption, Human Capital, and Growth Theory," Review of Development Economics, Wiley Blackwell, vol. 6(3), pages 351-68, October.
- Blundell, R. & Bond, S., 1995.
"Initial Conditions and Moment Restrictions in Dynamic Panel Data Models,"
104, Economics Group, Nuffield College, University of Oxford.
- Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
- Devereux, Michael P & Lockwood, Ben & Redoano, Michela, 2002.
"Do Countries Compete Over Corporate Tax Rates?,"
The Warwick Economics Research Paper Series (TWERPS)
642, University of Warwick, Department of Economics.
- Kokko, Ari, 1994. "Technology, market characteristics, and spillovers," Journal of Development Economics, Elsevier, vol. 43(2), pages 279-293, April.
- Arellano, Manuel & Bover, Olympia, 1995.
"Another look at the instrumental variable estimation of error-components models,"
Journal of Econometrics,
Elsevier, vol. 68(1), pages 29-51, July.
- M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
- Bruce A. Blonigen, 2005.
"A Review of the Empirical Literature on FDI Determinants,"
NBER Working Papers
11299, National Bureau of Economic Research, Inc.
- Bruce Blonigen, 2005. "A Review of the Empirical Literature on FDI Determinants," Atlantic Economic Journal, International Atlantic Economic Society, vol. 33(4), pages 383-403, December.
- Sjöholm, Fredrik, 1997.
"Technology Gap, Competition and Spillovers from Direct Foreign Investment: Evidence from Establishment Data,"
SSE/EFI Working Paper Series in Economics and Finance
212, Stockholm School of Economics.
- Fredrik Sjoholm, 1999. "Technology gap, competition and spillovers from direct foreign investment: Evidence from establishment data," Journal of Development Studies, Taylor & Francis Journals, vol. 36(1), pages 53-73.
- Verbon, H. A. A., 1980. "Testing for heteroscedasticity in a model of seemingly unrelated regression equations with variance components (SUREVC)," Economics Letters, Elsevier, vol. 5(2), pages 149-153.
- Baltagi, Badi H. & Li, Qi, 1995. "Testing AR(1) against MA(1) disturbances in an error component model," Journal of Econometrics, Elsevier, vol. 68(1), pages 133-151, July.
- Tomáš Havránek & Zuzana Iršová, 2008. "Intra-Industry Spillovers from Inward FDI: A Meta-Regression Analysis," Working Papers IES 2008/08, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jun 2008.
- Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
When requesting a correction, please mention this item's handle: RePEc:fau:wpaper:wp2009_07. 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: (Lenka Herrmannova)
If references are entirely missing, you can add them using this form.