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Financial-sector foreign direct investment and host countries: new and old lessons

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  • Linda S. Goldberg

Abstract

Many of the lessons from foreign direct investment (FDI) research on manufacturing and extractive resource industries are applicable to FDI research on the financial sector. This paper summarizes the main findings and policy themes of FDI research, with a primary focus on the implications of FDI for host countries, especially emerging market economies. I review evidence of technology transfers, productivity spillovers, wage effects, macroeconomic growth, and fiscal and tax concerns. Throughout this paper, I stress that parallel findings often arise from studies of general FDI and studies of financial-sector FDI. I also emphasize important differences between the effects of FDI in these sectors, especially with regard to local institution building and business cycles. These differences-more so than the similarities-should be the focus of research efforts.

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  • Linda S. Goldberg, 2004. "Financial-sector foreign direct investment and host countries: new and old lessons," Staff Reports 183, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednsr:183
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    Cited by:

    1. Rajmund MIRDALA, 2010. "Monetary Aspects Of Short-Term Capital Inflows In The Central European Countries," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 5(4(14)/ Wi), pages 342-358.
    2. Marc Ruhr & Michael Ryan, 2005. "“Following” or “attracting” the customer? Japanese Banking FDI in Europe," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 33(4), pages 405-422, December.
    3. M Ayhan Kose & Eswar Prasad & Kenneth Rogoff & Shang-Jin Wei, 2009. "Financial Globalization: A Reappraisal," IMF Staff Papers, Palgrave Macmillan, vol. 56(1), pages 8-62, April.
    4. Eswar S. Prasad, 2009. "India’s Approach to Capital Account Liberalization," Working Papers id:2043, eSocialSciences.
    5. Prasad, Eswar S., 2009. "Some New Perspectives on India’s Approach to Capital Account Liberalization," India Policy Forum, National Council of Applied Economic Research, vol. 5(1), pages 125-178.
    6. Eswar S. Prasad & Raghuram G. Rajan, 2008. "A Pragmatic Approach to Capital Account Liberalization," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 149-172, Summer.
    7. Daniel Esteban Osorio Rodíguez & Mauricio Avella Gómez, 2005. "The Cyclical Behavior of External Indebtedness: The Case of Foreign and Domestic Banks in Colombia," Borradores de Economia 345, Banco de la Republica de Colombia.
    8. repec:wsi:serxxx:v:53:y:2008:i:02:n:s0217590808002914 is not listed on IDEAS
    9. Ahmad Bello Dogarawa, 2011. "Chronology of banking reforms in Nigeria: A survey of past and present theoretical and empirical literature," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 19(4), pages 370-382, November.
    10. Mirdala, Rajmund, 2011. "Financial Integration and Economic Growth in the European Transition Economies," MPRA Paper 36695, University Library of Munich, Germany.
    11. repec:rss:jnljfe:v1i2p3 is not listed on IDEAS
    12. Prasad, Eswar, 2009. "India's Approach to Capital Account Liberalization," IZA Discussion Papers 3927, Institute for the Study of Labor (IZA).

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    Investments; Foreign ; Technology ; Economic development ; Financial services industry;

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