Foreign Firms and Local Communities
The literature on the effects of foreign direct investment (FDI) and activities of multinational enterprises (MNEs) on host-countries has been almost exclusively focused on issues of productivity, growth and wages. We argue that this leaves quite a bit of important unexplored areas of inquiry, particularly those connected with the interactions of local communities and governments with MNEs. As an example, we provide a novel analysis of local corporate philanthropy, which shows significant differences between local- and foreign-owned corporations. We find that foreign-owned enterprises are less likely to give, but that when they do give, it is substantially more in magnitude than domestic firms, everything else equal. This evidence is consistent with the hypothesis that foreign-owned firms would prefer to use corporate social responsibility (CSR) activities on a more international scale, but will strategically use CSR activities for public relation motives when the MNE faces greater local scrutiny and/or bias.
|Date of creation:||Aug 2011|
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- Bruce A. Blonigen & Robert C. Feenstra, .
"Protectionist Threats And Foreign Direct Investment,"
Department of Economics
96-01, California Davis - Department of Economics.
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95-21, Columbia - Graduate School of Business.
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- Galina An & Keith E. Maskus & Thitima Puttitanun, 2008. "Duration of Rent Extraction and the Entry Mode Decision of Multinational Enterprises," Review of Development Economics, Wiley Blackwell, vol. 12(4), pages 861-876, November.
- Branstetter, Lee, 2006. "Is foreign direct investment a channel of knowledge spillovers? Evidence from Japan's FDI in the United States," Journal of International Economics, Elsevier, vol. 68(2), pages 325-344, March.
- Lee G. Branstetter & Robert C. Feenstra, 1999.
"Trade and Foreign Direct Investment in China: A Political Economy Approach,"
NBER Working Papers
7100, National Bureau of Economic Research, Inc.
- Branstetter, Lee G. & Feenstra, Robert C., 2002. "Trade and foreign direct investment in China: a political economy approach," Journal of International Economics, Elsevier, vol. 58(2), pages 335-358, December.
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