the effect of tax treaties on multinational firms new evidence from microdata this paper uses affiliate level data from swedish multinationals to examine the impact of tax treaties on both overall affiliate sales and the composition of those sales in line with previous results we find little evidence for an effect of treaties on the level of total sales we do however find that a tax treaty increases the probability of investment by a firm in a given country in addition we find that a treaty reduces exports to the parent but increases imports of intermediate inputs from the parent this is consistent with treaties increasing the effective host tax this suggests that tax treaties impact the behavior of multinationals along some dimensions but not along others

international taxation and the direction and volume of cross border m as we show that the parent subsidiary structure of multinational firms created by cross border mergers and acquisitions is affected by the prospect of international double taxation specifically the likelihood of parent firm location in a country following a cross border takeover is reduced by high international double taxation of foreign source income at the same time countries with high international double taxation attract smaller numbers of parent firms a unilateral elimination of worldwide taxation by the united states is simulated to increase the proportion of parent firms locating in the united states following cross border mergers and acquisitions from 53 to 58

factors determining the location decisions of spanish mnes an analysis based on the investment development path on the basis of theoretical assumptions approached via the investment development path idp this study examines the most important factors for and against the location decisions in foreign direct investment taken by multinational enterprises considering host countries at very different stages of economic development latin american and european union countries we carry out different kinds of analysis on a sample of 103 firms belonging to a medium sized country that has recently achieved the status of developed country the results reveal that the importance that home country firm managers give to diverse location factors depends to a certain extent on the stage that each group of host countries has reached in the idp in line with prior research we find that firm managers consider mainly the group of factors associated with strategic asset seeking when deciding to locate their investments in the group of more developed countries european union in contrast our results show that when these firm managers choose the group of less developed countries latin america social and cultural factors play a more determinant role thus suggesting the importance of historical and cultural ties between the home and host countries

the irish case of dependency an exception to the exceptions the dependency approach has recently been criticized by authors who quote the exceptional east asian cases the irish case is used to refute these new modernizationist arguments on two counts 1 countries such as ireland not the east asian countries have regimes with characteristics that tend to set dependency relations in motion these characteristics include radical free trade free enterprise andforeign industrial domination 2 because of these characteristics ireland has endured economic stagnation and tendencies toward higher inequality irish economic growth under foreign dominated industrialization was slowed by decapitalization and by the absence of linkages between foreign and domestic industry time series models show that foreign penetration and free trade are related to slower economic growth because of slower investment growth and other reasons inequality increased primarily because of rising unemployment although social welfare programs reduced the effects of direct income inequality their effects have been reduced by regressive taxation and austerity programs

beyond trade the impact of preferential trade agreements on fdi inflows summary this paper investigates the effects of preferential trade agreements ptas on net fdi inflows of member countries using a comprehensive database of ptas in a panel setting pta membership is associated with a positive change in net fdi inflows and fdi gains increase with the market size of pta partners and their proximity to the host country the estimated relationship is driven by the developing countries in the sample and agreements signed in the late 1990s early 2000s a period when the majority of deep integration ptas have been advanced

reassessing economic dependency and uneven development the kenyan experience over the past decade students of development have conducted a substantial number of quantitative cross national studies on balance these studies provide support for some portions of the dependency world system theory showing a negative relationship between foreign capital penetration and both economic growth and equality however case studies indicate that the dependency perspective should not be generalized across countries individual countries have unique circumstances that govern the level and type of economic dependency affecting them this paper uses time series analysis to test the validity of dependency arguments in post independence kenya the results suggest that kenya is experiencing a transition from classical dependency to dependent development this process is characterized by an increase in foreign investment in manufacturing prompting economic expansion in the modern sectors of the country such uneven development tends to enrich elites associated with foreign capital

firm specific assets and the gains from direct foreign investment it is widely held that multinational enterprises arise as a consequence of the existence of knowledge based firm specific assets such as superior technology or management know how these assets are much like public goods within the firm in that they can be costlessly supplied to additional plants thus leading to the efficiency of multiplant production foreign direct investment then consists of supplying the services of the assets to foreign operations and repatriated earnings are payments for these services these notions are formalized in a simple model of the multinational enterprise and welfare implications are analyzed copyright 1989 by the london school of economics and political science

economic globalization and women s employment the case of manufacturing in mexico sociological research has been generally critical of the effects of economic globalization on developing countries however greater worldwide economic integration may have created new employment o

exchange rate regimes and fdi in developing countries a propensity score matching approach abstract theory suggests that regimes of relatively fixed exchange rates encourage inward foreign direct investment fdi relative to regimes of more flexible exchange rates we use propensity score matching psm to investigate the relationship between the exchange rate regimes of 70 developing countries and fdi into such countries using de facto regime classifications we include a large number of variables in the logit equation that estimates the propensity score the probability of regime choice we also use general to specific modeling to get alternative parsimonious versions based on four matching procedures the average treatment effects suggest with overall modest statistical significance that relatively fixed de facto regimes do encourage fdi compared with relatively floating regimes in addition the estimated effects are sometimes economically large

foreign capital dependence and development a new direction scholars have long debated the impact of foreign investment on the economies of less developed countries many argue that foreign investment is beneficial for the host economy others argue just as forcefully that dependence on foreign capital is detrimental this study offers a new conceptualization of foreign capital dependence that may resolve this debate foreign investment concentration which is the proportion of a host country s foreign direct investment stocks owned by the single largest investing country the theory is that high investment concentration limits the autonomy of state and business elites to act in the long term interests of domestic growth in a series of cross national panel regression models of 39 less developed countries estimated at five year intervals from 1970 to 1995 the often cited negative effects of foreign capital penetration on growth in gnp per capita are dramatically reduced or entirely replaced when investment concentration and the related concepts of export commodity and trade partner concentrations are included in the analyses foreign investment concentration has a significant long term negative effect on growth that is strongest over the initial five year period and decreases over the next 15 years a similar effect is also found for the 1990 1997 period this structural aspect of capital dependence has a greater impact on development than does the overall level of foreign capital penetration

foreign direct investment and inflation author affiliation selin sayek department of economics bilkent university bilkent ankara 06800 turkey e mail sayek bilkent edu tr acknowledgment i am very grateful to my advisor kent kimbrough for his support and help without which this research wouldn t have been possible i would also like to thank robert conrad enrique mendoza ed tower and dennis yang for their guidance and helpful comments i have also received valuable comments from duke university macroeconomics workshop participants and royal economic society 2001 conference participants as well as the two referees all errors remain mine 1 introductionin recent years interest in understanding the determinants of foreign direct investment fdi has intensified hand in hand with an increasing volume of fdi flows from 1990 to 2005 the total worldwide fdi inflows increased from 203 billion to 974 billion almost all developing countries are competing to attract a major share of these inflows in fact the share of net fdi inflows in the gross domestic product gdp of middle income countries has risen from 0 74 in the 1970s to 1 08 between 1985 and 1994 and to 2 85 between 1995 and 2005 1 the intensified competition to attract more fdi has led to changes in the regulatory frameworks provided by almost all countries according to the recent world investment report unctad 2003 during the period 1991 2002 around 95 of the changes in worldwide laws governing fdi have been favorable to multinational firm activity establishment of investment promotion agencies as well as provision of fiscal incentives have accompanied these improvements in local regulatory environments given the objectives of host countries to attract high quality investments and to ensure benefits from such foreign activity it is important to fully understand the factors influencing the fdi flows this article primarily studies the role of inflation among the factors that drive fdi inflation rates have increased from around 5 to 10 on average in developing countries during the 1970s followed by an increase of 49 on average among developing countries between 1985 and 1994 this trend of increasing inflation rates has been reversed in the late 1990s the inflation rates in developing countries have on average declined to 9 2 during 1995 2004 a period during which the net fdi inflows as a share of gdp have more than doubled in the middle income countries given the focus among developing countries to attract more fdi it is interesting to analyze whether the increasing inflation rates in the 1970s and 1980s might have been a deterrent for fdi inflows and whether their reversal in the 1990s might have contributed to the increase in fdi inflows to these economies despite not providing conclusive evidence the coincidences of high inflation and low fdi versus the low inflation and high fdi inflows into these developing countries motivates investigation of the possible links between the two variables therefore the broad objective of this framework is to study the effects of inflation on the investment decision of multinational enterprises mnes changes in inflation rates of the domestic or foreign country are anticipated to alter the net returns and optimal investment decisions of the mne in studying the explicit role of inflation in determining the investment pattern of mnes across domestic and foreign locations i use a model that is in fact discussing an investment smoothing behavior of the mne that faces domestic and foreign nominal shocks in this framework the act of investment smoothing captures a shift of investments across locations and not across time my argument is in line with aizenman 1992 who notes that the goal of diversifying exposure to country specific shocks induces producers to become multinationals this investment smoothing behavior can further be thought of as a production flexibility approach where the mne can shift production and trade decisions depending on the relative favorability of conditions in the two countries as discussed in sung and lapan 2000

dependence distorted development and fertility trends in noncore nations a structural analysis of cross national data to evaluate the hypothesis that dependence on developed nations distorts demographic development in less developed countries ldcs a researcher used panel regression analysis to study variables from 62 nations multinational corporate penetration an estimate of the shares of both a nations capital and its labor that are controlled by developed country based transnational corporations was used as a measure of the level of dependence the analysis demonstrated that school enrollment was highly correlated with level of development social insurance program history and both family planning effort fpe measures in addition countries that underwent the most economic growth the most concerted fpes etc had the most rapid decline in fertility rates conversely those with high levels of multinational corporate penetration dependency experienced either an increase in fertility or a slow decline for example south koreas 1965 cbr was 36 below the population mean of 45 in 1984 the cbr dropped to 20 even further below the population mean of 39 a dramatic absolute and relative fertility decline south korea also had the highest rate of economic growth and its increase in family planning program effort was dramatic from no measurable effect in 1972 to the nation with the highest fpe score in 1982 in addition the level of multinational penetration was modest in conclusion this research supports the view that intranational economic phenomena such as rate of economic growth and concerted fpes contribute significantly to fertility decline on the other hand multinational corporate penetration distorts development and impedes fertility reduction

the impact of banking deregulation on inbound foreign direct investment transaction level evidence from the united states abstract we evaluate the effects of state level banking deregulation that resulted in improved access to cheaper local finance on foreign firms investing in the u s we provide direct micro level evidence from u s inbound foreign direct investment transactions showing that interstate banking but not intrastate branching deregulation increased the number of transactions reduced the average transaction value and boosted overall investment by foreign multinationals we also show that lower cost of local credit and greater local bank competition in each state following the interstate banking deregulation are potential mechanisms that stimulated fdi activity finally we demonstrate that after the adoption of the interstate banking deregulation both the number and the average value of transactions increased in industries that are more dependent on external finance relative to industries that are less dependent

exchange rate and chinese outward fdi abstractdid the exchange rate er regime change that was announced by the chinese government in 2005 lead to an increased sensitivity of chinese multinational companies mncs to er fluctuations to answer this question our article considers the effect of er level volatility and expectation on the chinese outward foreign direct investment ofdi activities in 119 countries for a period of 2003 2013 we find striking evidence that chinese renminbi appreciation has a negative impact on chinese outward fdi flows and both higher er volatility and expected depreciation encourage chinese outward fdi flows we introduce two complementary effects that explain these findings repatriation effect and mercantilist effect in view of the recent debate about the growing importance of chinese renminbi in the international transactions we believe that our research results shed light on the possible impact of er policies on chinese mncs behaviour and global fdi distribution

the effects of model specification on foreign direct investment models an application of count data models previous studies have drawn a theoretical and empirical connection between foreign direct investment fdi and exchange rates using continuous measures of fdi however fdi data are often in discrete count form i take a representative study of the fdi exchange rate relationship by jose m campa 1993 and i analyze the sensitivity of the results to specification of the dependent variable whereas campa uses a tobit specification i use a count data specification to model counts of fdi occurrences using data on fdi in the united states from 1982 to 1993 controlling for the traditional determinants of fdi i find that the results are sensitive across specifications significance levels and the magnitude of the coefficients change when going from a continuous tobit specification to a zero inflated poisson zip model designed for count data formal statistical testing finds that the zip specification likely models the data most properly thus i indicate that misspecification bias from modeling discrete data with continuous distributions is important

dependency disarticulation and denominator effects another look at foreign capital penetration less developed countries desparately need capital to develop but countries dependent on foreign capital face slower economic growth higher income inequality and possibly impaired domestic capital formation these conclusions emerge from a reassessment of glenn firebaugh s broad critique of capital dependency research which exposed an important error in earlier studies the solution charts new theoreticall ground by factoring dependency effects into the differential productivity of foreign and domestic investment and the negative externalities from foreign capital penetration the revised formulation is applied to cross national analyses of economic growth decapitalization and income inequality the findings consistently support capital dependency theory

exchange rates and fdi goods versus capital market frictions changes in exchange rates affect countries through their impact on cross border activities such as trade and foreign direct investment fdi with increasing activities of multinational firms the fdi channel is likely to gain in importance economic theory provides two main explanations why changes in exchange rates can affect fdi according to the first explanation fdi reacts to exchange rate changes if there are information frictions on capital markets and if investment depends on firms net worth capital market friction hypothesis according to the second explanation fdi reacts to exchange rate changes if output and factor markets are segmented and if firm specific assets are important goods market friction hypothesis we provide a unified theoretical framework of these two explanations we analyse the implications of the model empirically using a dataset based on detailed german firm level data we find greater support for the goods market than for the capital market friction hypothesis

the impact of u s tax reform on foreign direct investment in the united states abstract this study empirically examines how taxes shape foreign direct investment and finds that increased taxes spur inward foreign investment this finding conforms with theories that recognize that foreign investor response is critically shaped by the tax provisions faced by the foreign investor in his home country and by the effects of tax reform on pre tax asset returns we demonstrate that average tax rates may better proxy tax effects than do effective tax rates our findings are more robust than previous results since we utilize the entire 1980s tax history consider a fuller set of industry distinctions and estimate the tax responsiveness in the context of exchange rate fluctuations

firm specific assets and the link between exchange rates and foreign direct investment foreign direct investment fdi theory and empirical studies have generated mixed support for a link between exchange rates and fdi this paper argues that exchange rate movements may affect acquisition fdi because acquisitions involve firm specific assets which can generate returns in currencies other than that used for purchase using data on japanese acquisitions in the united states across three digit sic industries from 1975 to 1992 maximum likelihood estimates from discrete dependent variable models support the hypothesis that real dollar depreciations make japanese acquisitions more likely in u s industries particularly those which more likely have firm specific assets copyright 1997 by american economic association

dependency theory and taiwan analysis of a deviant case the case of taiwan represents a challenge to two predictions from dependency theory that foreign economic penetration leads to slow economic growth and also to heightened inequality since the early 1950s taiwan has received massive foreign aid and investment but it has also had one of the highest sustained rates of growth in the world while income inequality on the island has decreased substantially an examinatin of this deviant case is pursued by consideration of the various mechanisms dependency theorists claim are responsible for the linkage of foreign economic penetration to stagnation and inequality in the taiwan case none of these mechanisms work out as predicated instead a variety of factors including the nature of the japanese colonial experience the emphasis on labor intensive enterprise and the absence of an entrenched burgeoisie created a situation in which both rapid growth and increasing equality could occur consideration of taiwan draws attention to flaws in the arguments of most

foreign direct investment and country specific human capital i introduction the past three decades have witnessed an unprecedented increase in foreign direct investment fdi in the world annual fdi flows from and to organisation for economic cooperation and development oecd countries have increased more than 30 fold from 1982 to 2005 while the world trade merely quadrupled during the same period the ratio of gross private capital flows to gross domestic product gdp has risen from 10 3 in 1990 to 32 4 in 2005 the ratio of fdi flows to gdp has climbed up from 2 2 in the early 1990s to 4 4 in 2005 1 as fdi gained importance in the international movement of capital a variety of theoretical and empirical studies have investigated the factors that determine fdi 2 in this article we offer an important but under studied determinant of fdi foreign educated labor in fdi host countries specifically using international bilateral data on fdi and foreign education we present empirical evidence on the role of country specific foreign educated labor in an fdi host country as a determinant of foreign direct investments production involves the process of combining physical capital and the human capital of employees human capital includes the general skills of workers but it also includes their knowledge of firm specific technology managerial skills specific to the organization and efficient communication skills with co workers consequently the labor that possesses these firm specific skills which can be readily used by a firm can be more productive in that firm than in other firms when a firm invests in a foreign country through a subsidiary that shares the technology of the parent firm the labor force that has acquired various types of human capital specific to the parent firm and thus to the subsidiary can be more productive in the foreign subsidiary for instance the local managers of a foreign subsidiary who are able to speak the same language of the managers of their parent firm or who know thoroughly well how the parent firm and its subsidiaries are organized and operated can be more productively utilized in the subsidiary firm since human capital specific to a firm and its foreign subsidiaries can be acquired through education provided in the country of the parent firm the availability of workers in a potential fdi host country who studied in the parent firm country can be an important deciding factor for a firm in investing abroad through its foreign subsidiary 3 foreign training can provide various types of country specific human capital that would increase labor productivity more in the host country of training than in other countries country specific human capital includes language capital which has been shown by numerous papers such as chiswick and miller 1993 and lazear 1999 to have considerable importance in labor market performances knowledge on firm organization and social system is another example of country specific human capital that can be acquired through foreign training foreign education can also enhance the productivity of students in firms of the host country because it provides information about the ability and potential of students in a form that can be more easily processed by firms in the host country greater knowledge regarding employees allows firms to utilize manpower more efficiently and enhance workers productivity as pointed out by becker 1993 who discusses low worker mobility across countries as evidence of the importance of country specific training earlier theoretical models in international trade such as macdougall 1960 attribute international capital movement to the difference in factor endowment measured by physical capital per worker 4 empirical findings however show that the actual capital flows fall short of the theoretical prediction that capital moves from developed economies to developing economies to take advantage of the higher rates of returns to capital

investment dependence and alternative explanations of third world mortality a cross national study dependency perspectives contend that foreign investment promotes underdevelopment in the third world whereas diffusionist perspectives argue that it promotes development earlier cross national research conceptualized development as economic growth or inequality this study conceptualizes development as basic needs satisfaction focusing on infant mortality and life expectancy at 1 year of age mortality effects of 1967 multinational corporate penetration and foreign aid dependence are assessed for 63 underdeveloped countries in panel models expanding to 1980 other variables affecting mortality include multinational corporate investment flows secondary school enrollment and changes in birth rates and government health spending aid dependence has no effects multinational corporate penetration has significant harmful effects on mortality that tend to increase with time in addition to harmful effects on infant mortality penetration has small benefits for infant mortality via promotion of health spending the influence of multinational corporate penetration on mortality appears to be mediated in part by inequality authors

the effects of wrongful discharge protection on foreign multinationals evidence from transaction level data using detailed micro level data from 1977 to 1994 we analyze the impact of employment protection measures adopted across us states on the number and the value of new inbound foreign direct investment fdi transactions completed by foreign owned companies our findings point to a robust negative association between the implementation of employment protection laws and both the extensive and the intensive margins of fdi in the us when states adopt regulations that increase employers firing costs fdi transactions by foreign multinational companies become less frequent and decrease in value with stronger negative impacts in more labour intensive industries there is also some evidence of diversion and spillover effects from the adoption of these measures by neighbouring states

the interaction between forms of insurance contract and types of technical change in medical care a simple three parameter description of medical technology is introduced to investigate the relationships between technical change welfare and type of insurance contract the value of a particular change in technology depends on the existing form of contract the marginal equilibrium expected utility to consumers of different types of technical change hinges on the manner in which the insurance arrangement is designed to mitigate moral hazard these results open the way for a positive model of the effects of insurance arrangements on the types of technology that are adopted and the effects of technical changes on the prevalent forms of insurance contract

medical care costs how much welfare loss hardly a week goes by without a front page newspaper article on rising health care costs and the uninsured in this article i focus mainly on costs arguing that the issue has been somewhat misconceived while the level of medical care spending in the u s is a cause for concern the welfare losses associated with rises in that level of spending may not be as large as the public rhetoric can make them seem in fact cost containment may not be as urgent as is widely supposed and some proposed cost containment policies may result in welfare losses for the insured and even increase the number of uninsured

insurance and incentives for innovation in medical care economists have frequently pointed to the distorting effects of health insurance as a major contributor to rapidly increasing health costs relatively little is known however about the influence of changing medical technology on expenditures if increases in expenditures are in part the result of development of costly but worthwhile new technologies a common view among noneconomists failure to take account of this may lead to over statement of the distortive effects of insurance on the other hand some observers have questioned whether the benefits derived from expensive medical innovations always exceed the costs 18 others have suggested that resources devoted to the development of very expensive technologies might be better used for other kinds of medical research 16 3 in light of these arguments it appears that the relationships between medical insurance and technological change may be quite important if the extent of insurance coverage influences the rate and direction of technological change in medicine then the long run welfare effects of insurance are more complex than current models 5 6 allow it is sometimes argued informally that such an influence existsthat the presence of insurance biases the system toward innovations that expand capabilities while increasing expenditures and away from those that reduce costs 15 20 such a hypothesis has however never been developed as an implication of a formal economic model even the term bias in the argument is unclear it appears to be used in a normative sense but it has not been explained clearly why such a bias if it exists leads to welfare losses even if it is true for example that the presence of insurance leads to the adoption of a more costly mix of medical innovations than would otherwise occur this is not obviously undesirable to facilitate the purchase of costly but beneficial medical care is the purpose of insurance this paper defines bias in technological change in a normative sense it employs a simple model of insurance and profit maximizing innovators and develops sufficient

foreign direct investment and debt financing in emerging economies the rich dynamics of capital flows is an important characteristic of business cycles in emerging market economies in the data external debt is always procyclical while fdi is procyclical only in normal times we provide a microfounded rationale for this pattern by linking financial shocks to capital flows for this purpose we build a small open economy model in which firms are subject to borrowing constraints and are either owned domestically or by foreign investors who purchase firms through fdi during a financial crisis the valuation gap per unit net worth between foreign and domestic investors widens which triggers more fdi inflow our model produces business cycle moments consistent with empirical observations

troubled banks impaired foreign direct investment the role of relative access to credit during the 1980 s theories were developed to explain the striking correlation between real exchange rates and foreign direct investment fdi however this relationship broke down for japanese fdi in the 1990 s as the real exchange rate appreciated while fdi plummeted we propose the relative access to credit hypothesis and show that unequal access to credit by japanese firms contributes to the explanation of declining japanese fdi using bank level and firm level data sets we find that financial difficulties at banks were economically and statistically important in reducing the number of fdi projects by japanese firms into the united states jel g21 f36

medical insurance technological change and welfare concerns have been expressed about the welfare effects of expensive innovations in medical care financed largely through medical insurance this paper develops a model which considers such issues it is shown that even if insurance is purchased optimally subject to a plausible constraint on the form of the contract innovations may be adopted that have the effect of reducing expected welfare the question of how the benefits of medical innovations ought to be measured in the presence of insurance is also explored

does foreign capital harm poor nations new estimates based on dixon and boswell s measures of capital penetration l a s efforce de mesurer l impact economique de la penetration du capital et de l investissement etranger sur l economie des pays en voie de developpement il examine et critique le mode d evaluation de la production propose par w j dixon et t boswell il estime qu il convient de distinguer investissement local et investissement etranger il presente les differents types d interpretation et etudie un certain nombre de donnees collectees concernant le panama la jamaique le liberia la guinee et enfin trinidad et tobago il se demande d une part si l investissement local et preferable a l investissement etranger et d autre part si ce dernier appauvrit les pays en voie de developpement il s interroge sur le bien fonde de la theorie de la dependance

multinationals multi plant economies and the gains from trade a general equilibrium model of a multinational enterprise based on economies of multi plant operation is developed these economies are modelled as arising from the existence of a joint input whose productivity in each production facility is independent of the number of facilities maintained by a firm the multinational thus offers the world increased technical efficiency by eliminating the duplication of the joint input that would occur with independent national firms since this technical efficiency may come at the expense of increased market power the full determinants of home country host country and world welfare are considered

the economics of foreign direct investment and trade with an application to the u s food processing industry this article investigates the determinants of foreign direct investment and its relationship to trade in the u s food industry a multinational corporation maximizes profits by choosing between production at home which is exported and production in a host country this introduces the possibility that foreign affiliate sales can substitute and or complement exports the empirical framework consists of a four equations system with foreign affiliate sales exports affiliate employment and fdi as endogenous variables the results confirm small substitution between foreign sales and exports and that the host country s protection policies affect the decision to invest abroad

research on international business problems and prospects this paper reflects on the general problems and specific opportunities faced by contemporary research on multinational enterprise the general problems include controlling properly for the firm s opportunities when testing the effectiveness of its policy choices avoiding biases that result from studying surviving business units and ignoring those that disappeared and mobilizing longitudinal data and exploiting the many census based data sets now coming available

strategic second sourcing by multinationals multinationals often serve foreign markets by exporting as well as by investing directly in foreign production facilities we argue that if the multinational competes in an oligopolistic market characterized by strategic complements then there are strategic reasons to use two production facilities committing to a second source allows the firm to keep average cost low while increasing its marginal cost the increase in marginal cost softens product market competition resulting in higher profits we argue that this theory also has implications for the make or buy literature in production management and the literature on second sourcing in industrial organization

are economic liberalization and equality compatible evidence from south asia summary global studies of liberalization and inequality have produced divergent findings arguably because of highly heterogeneous contexts across countries and regions this paper focusing on the south asian experience with more homogeneous contexts finds that liberalization efforts and inequality grew in the region during 1980 03 data support a mutually reinforcing positive relationship in the region suggesting that liberalization helps increase inequality which in turn serves as a precondition to liberalize because economically unequal countries tend to liberalize more intensely possibly hurting the poor a lesson for concerned policymakers is to introduce policies to incrementally advance economic openness

investment climate and fdi in developing countries firm level evidence this paper uses firm level data across 77 developing countries to show that constraints related to investment climate hamper foreign direct investment fdi the main results show that physical infrastructure problems financing constraints and institutional problems discourage fdi these results are robust to an alternative definition of fdi introduction of additional explanatory variables and some breakdown analyses different sectors of activity and comparison between sub saharan africa and other developing countries the results also highlight that exporter foreign firms are more constrained in their activity by physical infrastructure hurdles and the lack of skilled workers compared to firms supplying the domestic market

natural disasters and foreign direct investment the world s population has witnessed the concurrence of two powerful global trends an unprecedented growth in foreign direct investment fdi and an increase in natural disasters since investment decisions are based on an evaluation of expected risks and returns we consider whether fdi decisions are influenced by natural disasters we do so by considering the relation between fdi in 94 countries between 1984 and 2004 and the number of disasters striking those countries across a variety of empirical tests that control for two way fixed effects we find natural disasters to be negatively and statistically significantly associated with a country s fdi

high growth and low consumption in east asia how to improve welfare while avoiding financial failures this paper analyzes certain policies that are typical of a number of rapidly growing east asian countries in which a fixed exchange rate combined with a surplus labor market has made domestic assets relatively inexpensive generating high rates of fdi as well as domestic capital formation this investment hunger can lead to unanticipated declines in the returns to investment and resulting financial insolvencies private consumption remains low and there are concerns that high savings rates cannot be sustained we construct a dynamic general equilibrium model and apply it to a stylized asian economy loosely based upon china we calibrate a benchmark equilibrium and carry out various counterfactual simulations to analyze alternative policies in particular tax cuts and exchange rate revaluations as instruments in increasing private consumption while avoiding bank failures

structural determinants of peripheral urbanization the effects of international dependence this paper examines the extent and mechanisms by which international economic dependence affects urbanization in peripheral countries between 1950 and 1970 using panel regression analyses qnd structural equation models on a sample of37 countries investment dependence is found to have a lagged positive effect on urbanization in 1970 the data suggest that investment dependence stimulates growth in the tertiary and informal sectors while inhibiting growth in the industrial labor sector this restructuring of the urban labor force generates increased levels of overurbanization in peripheral countries finally it is argued that dependency theory provides a more adequate framework for understanding urbanization in peripheral countries than modernization theory

direct foreign investment in the united states abstract cross section analysis of direct foreign investment in the united states provides some support for market structure and transaction cost explanations of dfi a time series country by country analysis suggests the importance of profitability differences the desire to avoid trade barriers and a shift in investment patterns related to world oil shocks

mode size and location of foreign direct investments and industry markups abstract several studies find that inward foreign direct investment fdi raises host industries competition and productivity using aggregate fdi measures the monetary flows or the change in the industries foreign production share yet fdi flows are composed of many individual heterogeneous investments reflecting this heterogeneity i ask how the average traits of the individual investments that constitute the fdi flow further affect the host while the results show that inward fdi does heighten competition for us manufacturing industries in 1987 1991 price cost markups fall even more when foreign investments locate further away from incumbent industry which is consistent with endogenous location choice

going multinational under exchange rate uncertainty abstract we analyze a model where an exporting firm competes a la cournot in a foreign market the firm faces exchange rate uncertainty and has the option to invest abroad the paper contributes four results first real option pricing techniques are used to derive the optimal timing rule of the investment and the price of the firm and foreign competitors second the sunk cost of entry into the foreign market introduces hysteresis in direct investment flows we find that the degree of hysteresis grows with the number of firms in the industry third we determine the conditions under which dumping may appear and the role of fdi in precluding this type of dumping fourth tariffs have the well known fdi inducing effect more so in less competitive markets and are more effective at deterring delocation furthermore a tariff might have the effect of triggering dumping

homeward bound interest identity and investor behavior in a third world export platform1 are indigenous investors in third world export platforms more stable than their allegedly footloose foreign rivals while mainstream economists hold that investor behavior is independent of investor identity and therefore call for the parallel treatment of domestic and foreign firms their critics hold that indigenous investors are more dedicated than their foreign counterparts and therefore call for industrial policies designed to cultivate and defend native entrepreneurs who is correct the author uses a unique combination of qualitative and quantitative data to document and account for the relative stability and dynamism of indigenous investors in the dominican republic s largest export processing zone and thereby brings economic sociology back from the margins of development theory and development theory back into the heartland of sociology

the long term effects of foreign investment dependence on economic growth 1940 1990 does dependence of a national economy on foreign investment promote economic growth or underdevelopment the recent exchanges between glenn firebaugh and william j dixon and terry boswell suggest the contentious nature of this debate this study analyzes models similar to those tested in previous research but with data from earlier time points to examine the long term effects of foreign capital penetration accumulated stocks of foreign capital gdp in 1938 have a short term five year positive effect on economic growth followed by a 20 year lagged negative effect on economic growth beginning in 1960 and lasting at least 30 years similar effects are found using a second indicator of foreign investment dependence debits on investment income for the 1950 90 period the international migration of capital has facilitated development of the world s natural resources and has been instrumental in transmitting the direct effects of the industrial revolution from area to area thereby it has helped to increase

knowledge seeking and location choice of foreign direct investment in the united states to what extent do firms go abroad to access technology available in other locations this paper examines whether and when state technical capabilities attract foreign investment in manufacturing from 1987 1993 we find that on average state r d intensity does not attract foreign direct investment most investing firms are in lower tech industries and locate in low r d intensity states suggesting little interest in state technical capabilities in contrast we find that firms in research intensive industries are more likely to locate in states with high r d intensity foreign firms in the pharmaceutical industry value state r d intensity the most at a level twice that of firms in the semiconductor industry and four times that of electronics firms interestingly not only firms from technically lagging nations but also some firms from technically leading nations are attracted to r d intensive states this suggests that beyond catching up firms use knowledge seeking investments also to source technical diversity

income inequality development and dependence a reconsideration we reconsider the role of foreign investment in income inequality in light of recent critiques that question the results of quantitative cross national research on foreign capital penetration we analyze an unbalanced cross national data set in which countries contribute different numbers of observations with a maximum of 88 countries and 488 observations dated from 1967 to 1994 random effects regression models that control for unmeasured country heterogeneity are used to investigate effects of foreign capital penetration on inequality measured as the gini coefficient against the background of an internal developmental model of inequality we adapt firebaugh s 1992 1996 critique of the literature on the effect of foreign investment on economic growth to the study of income inequality and find that the stock of foreign direct investment has an effect on inequality that is independent of the mechanisms identified by firebaugh we explore tsai s 1995 claim that the effect of foreign capital penetration is spurious and find that foreign stock has a significant positive effect on inequality net of region specific differences an alternative interpretation of the findings of the foreign investment inequality literature is discussed in light of the discovery of an inverted u shaped relationship between income inequality and foreign investment stock per capita we conclude that thinking on the relationship between income inequality and investment dependence should be revised in light of an investment development path relating the inflow and outflow of foreign capital to economic development

semiglobalization and international business strategy if markets were either completely isolated by or integrated across borders there would be little room for international business strategy to have content distinctive from mainstream strategy but a review of the economic evidence about the international integration of markets indicates that we fall in between these extremes into a state of incomplete cross border integration that i refer to as semiglobalization more specifically most measures of market integration have scaled new heights in the last few decades but still fall far short of economic theory s ideal of perfect integration the diagnosis of semiglobalization does more than just supply a relatively stable frame of reference for thinking about the environment of cross border operations it also calls attention to the critical role of location specificity in the prospects of distinctive content for international business strategy relative to mainstream business and corporate strategy in addition it flags factors products subject to location specificity as being salient from the perspective of international business finally it highlights the scope for strategies that strive to capitalize on the large residual barriers to cross border integration as well as those that simply try to cope with them

volatility employment and the patterns of fdi in emerging markets abstract the purpose of this paper is to explore the implications of the deepening presence of multinationals in emerging markets on the cost of macroeconomic volatility there we find that macroeconomic volatility has a potentially large impact on employment and investment decisions of multinationals producing intermediate inputs in developing countries this is the case even for risk neutral multinationals as their profit function is non linear due to price and productivity effects for industries with costly capacity the multinationals would tend to invest in the more stable emerging market s higher volatility of productivity shocks in an emerging market producing the intermediate inputs reduces the multinationals expected profits high enough instability in such a market would induce the multinationals to diversify intermediate input production investing in several emerging markets this effect is stronger in lower margin industries we identify circumstances where this diversification is costly to emerging markets such a diversification increases the responsiveness of the multinationals employment in each country to productivity shocks channeling the average employment from the more to the less volatile location and reducing the multinationals total expected employment in emerging markets

disaggregated capital flows and developing countries competitiveness summary attracting capital and foreign exchange flows is crucial for developing countries yet these flows could lead to real exchange rate appreciation and may thus have detrimental effects on competitiveness jeopardizing exports and growth we investigate this dilemma by comparing the impact of six types of flows on real exchange rate behavior in a sample of 57 developing countries covering africa europe asia latin america and the middle east the results reveal that portfolio investments foreign borrowing aid and income lead to real exchange rate appreciation while remittances have disparate effects across regions foreign direct investments have no effect on the real exchange rate contributing to resolve the above dilemma

the effect of international dependence on income inequality and political violence recent studies of collective political violence have overlooked international causal factors this cross national study of 46 51 nations including analyses of influential cases expends on earlier analyses by simultaneously examining both the external international and the internal intranational determinants of collective political violence regression analysis suggests that transnational corporate penetration an international factor contributes to increased political violence both directly and indirectly through its effect on income inequality we conclude that theoretical and empirical integration of intraand international factors yields the most comprehensive explanation of the causes of collective political violence

urban bias dependence and economic stagnation in noncore nations this paper contributes to the growing body of research that assesses the effects of patterns of urbanization on economic growth in less developed countries ldcs regression analysis of data for 65 80 nations including analyses of influential cases suggests that both urban bias and dependency have independent simultaneous and negative effects on economic growth further analyses reveal a strong positive relationship between dependency and urban bias these findings show that understanding urbanization and development in the third world requires the consideration of both external international and internal intranational factors and a combination of the insights gained from dependency world system human ecology and modernization theories

boon or bane reassessing the productivity of foreign direct investment we assess the effects of foreign and domestic capital on economic growth using the latest data and better models of economic growth than those previously used we explicitly consider the role of human capital in the process of economic development we find no evidence that foreign direct investment harms the economic prospects of developing countries the flow of foreign capital from 1980 to 1991 spurred growth in gross domestic product per capita while the level of foreign stock or foreign penetration had no discernible effect indeed new foreign investment was more productive dollar for dollar than was capital from domestic sources previous suggestions that foreign investment flows are less beneficial than domestic ones were based on a misinterpretation moreover foreign direct investment stimulates investment from domestic sources consequently developing countries have no reason to eschew foreign capital as dependency theorists urge

out of africa locational determinants of south african cross border mergers and acquisitions abstractsouth africa is the africa s biggest source of outward foreign direct investment this study examines the principal locational motives of cross border mergers and acquisitions cbma by south african firms for the 1990 2014 period the role of inter country cultural and economic linkages is also studied firm level data of south african merger and acquisition activities in 74 host countries are used to estimate a number of model specifications that control for host country economic geographical cultural and institutional characteristics estimations are carried out using random effects negative binomial panel model capturing the host economy market and enhancing efficiency are found to be the two major motives driving south african corporations cbma activities natural resources acquisition seems a less important motive while strategic assets such as patents and technology do not appear to be attractive the role of cultural and economic linkages between the home and the host country is found t

foreign direct investment in the uk evidence from a disaggregated panel of the uk food sector most empirical studies of foreign direct investment fdi typically use either a cross sectional capturing ownership specific and industry determinants or time series capturing the determinants of fdi over time approach panel data techniques however have the advantage of combining both aspects of the data using disaggregated panel data for the uk food sector a leading recipient of fdi in the uk the results in this paper highlight the predominance of ownership specific and industry characteristics in determining the presence of foreign owned firms in this sector while macro economic factors have a more marginal effect

greenfield versus merger acquisition fdi same wine different bottles relying on a large foreign direct investment fdi transaction level dataset unique both in terms of disaggregation and time and country coverage this paper examines patterns in greenfield gf versus merger acquisition ma investment although both are found to seek out large markets with low international barriers important differences emerge ma is more affected by geographic and cultural barriers and exhibits opportunistic behaviours as it is more sensitive to short run changes such as a currency crisis on the other hand gf is relatively driven by long run factors such as origincountry technological and institutional development or comparative advantage these empirical facts are consistent with the conceptual distinction made between these two modes i e ma involves transfer of ownership for integration or arbitrage reasons while gf relies on firms own capacities which are linked to the origin countries attributes they also suggest that gf and ma are likely to respond differently to policies intended to attract fdi

optimal health insurance and provider payment the authors derive optimal insurance for patients and payment method for physicians when neither the input decided by the patient quantity of treatment nor the input decided by the physician effort are contractible the equilibrium in this third best regime may sometimes be second best in which both the physician input and the report of treatment are verifiable otherwise truthful reporting forces a third best characterized by provider prospective payment and suboptimal effort while consumers demand becomes excessive the authors also analyze how professional ethics alters the equilibrium finally collusive reporting mechanisms imply more stringent constraints while competition among physicians relaxes them copyright 1997 by american economic association

do trade agreements stimulate international trade differently evidence from 296 trade agreements in a seminal article rose 2004 found that the assumed positive impact of the wto on international trade was questionable this finding has been scrutinised and modified in subsequent research using different data sets econometric methods and separating the wto from other forms of trade agreements a key characteristic of the subsequent literature is the rather simplistic way in which trade agreements are treated whereby all trade agreements are lumped together trade agreements come however in many different forms and shapes this study addresses these differences in trade agreements using a unique database of 296 trade agreements we distinguish 17 trade related policy domains and indicate whether the agreements contain legally enforceable commitments this extensive and novel taxonomy of trade agreements enables us to allow for the possible heterogeneity of the impact of trade agreements on international trade using a gravity model we find that trade agreement heterogeneity indeed matters for international trade and that countries experience significant trade increases due to comprehensive trade agreements even if not all participants are in the wto

the real exchange rate and foreign direct investment in the united states relative wealth vs relative wage effects abstract there has been a significant correlation between u s inward foreign direct investment and the united states real exchange rate since the 1970s in this paper we examine the determinants of four measures of inward foreign direct investment to the united states from seven industrial countries over the period 1979 1991 we find strong evidence that relative wealth significantly affects u s inward foreign direct investment we find no evidence that relative wages have a significant impact on the determination of u s foreign direct investment

the impact of exchange rate deviations from relative ppp equilibrium on the u s demand for foreign equities abstract applying fixed effects panel data this study investigates the impact of u s dollar exchange rate movements during different exchange rate states overvaluation and undervaluation on the monthly real gross and real net purchases of foreign equities by u s residents over the post plaza accord period the foreign equities come from 22 developed and 25 developing countries previous research has posited two alternative hypotheses regarding the relationship between exchange rates and foreign investment these are the wealth effect and the profit oriented effect the evidence herein suggests that these two hypotheses coexist we find robust evidence for a negative relationship between the exchange rate movements of an undervalued u s dollar and the demand for foreign equities for developed countries the wealth effect dominates the profit oriented effect when the u s dollar is overvalued while for developing countries the profit oriented effect dominates the wealth effect the results emphasize the importance of considering exchange rate states derived from a relative ppp equilibrium when analyzing u s allocations to foreign equities the findings with respect to the macroeconomic control variables are mainly in agreement with the predictions of international financial theory some of the results however disappear or become inconclusive for the period after the bankruptcy of lehman brothers this may be explained by the increased uncertainty in international financial markets following this unprecedented event the findings are robust with respect to different constructed equilibrium exchange rates

multinational firms heterogeneity in tax responsiveness the role of transfer pricing in this paper we show that the ability of multinational firms to manipulate transfer prices affects the tax sensitivity of foreign direct investment fdi we offer a model of international capital allocation where firms are heterogeneous in their ability to manipulate transfer prices perhaps paradoxically we show that the ability to shift profits can make parent companies investment more sensitive to host country tax rates as long as investors expect fiscal authorities to use price and profit detection methods we then offer a comprehensive empirical study to test our predictions in the case of japanese fdi we exploit the finding that the unobservable ability to manipulate transfer prices is correlated with whole ownership of affiliates and r d expenditure based on country parent firm and sector characteristics we estimate an investment equation on a sample of 3 614 japanese affiliates in 49 emerging countries we obtain a greater semi elasticity of investment to the statutory tax rate in affiliates that are wholly owned and that have r d intensive parents we interpret these results as indirect evidence that abusive transfer pricing is one of the determinants of fdi activity

real exchange rate risk expectations and the level of direct investment four models of direct investment are analyzed assuming various relationships between foreign and domestic production the direct effect of risk adjusted expected real foreign currency appreciation is to lower foreign capital cost thus stimulating direct investment however when costs of other inputs are also affected induced productivity changes or output price changes may offset the direct effect reducing direct investment pooled estimation results for u s annual bilateral direct investment flows to five industrialized countries show significant reductions associated with expected appreciation of real foreign currency and significant increases associated with risk these results are consistent with the model where in response to risk the multinational firm reduces exports to the foreign country but offsets this somewhat by increasing foreign capital input and production

physician reimbursement and technology adoption this study analyses the incentives of health care providers to adopt new technologies in a world with ex post moral hazard it is shown that in a second best efficient world with respect to insurance coverage a linear remuneration scheme implements the adoption of second best efficient technologies only in special cases under a third best standard coinsurance contract the adequate reimbursement rule is characterised depending on the characteristics of the technology and on patients demand elasticities with respect to monetary and non monetary costs a shift from fee for service to capitation is likely to display undesirable incentives for very severe illnesses by inducing a reduction in the technically feasible level of healing or an increase in non monetary costs of treatment

climbing to the top foreign direct investment and property rights this article operates at the interface of the literature on the impact of foreign direct investment fdi on host countries and the literature on the determinants of institutional quality we argue that fdi contributes to economic development by improving institutional quality in the host country this proposition is tested within a large panel data set of 70 developing countries for the period 1981 2005 we show that fdi inflows have a positive and highly significant impact on property rights results are very robust and not affected by model specification different control variables or estimation technique to our knowledge this is the first article to empirically test the fdi property rights linkage jel f23 o43 p48

repatriation taxes and outbound m as repatriation taxes reduce the competitiveness of multinational firms from tax credit countries when bidding for targets in low tax countries this comparative disadvantage with respect to bidders from exemption countries violates ownership neutrality which results in production inefficiencies due to second best ownership structures this paper empirically estimates the magnitude of these effects the abolishment of repatriation taxes in japan and in the u k in 2009 has increased the number of acquisitions abroad by japanese and british firms by 16 1 and 1 6 respectively a similar policy switch in the u s is simulated to increase the number of u s cross border acquisition by 11 0 the yearly gain in efficiency is estimated to be 108 9 million dollar due to the japanese reform and 3 9 million dollar due to the u k reform simulating such a reform for the u s results in a yearly efficiency gain of 537 0 million dollar

growth effects of foreign and domestic investment over tha past few years numerous studies in sociology have concluded that foreign investment harms poor nations these studies have focused on the coefficient for foreign capital stock controlling for flow new investment and defying logic have inferred that a negative coefficient for stock reflects dependency effects that retard economic growth since capital stock is the denominator for investment rate the greater the stock the lower the investment rate for a given level of new investment hence the negative coefficient for capital stock found in dependency studies indicates a beneficial investment effect not a harmful effect this point is demonstrated by reanalysis of the data used in dependency studies in these data foreign investment spurs growth earlier analysts have concluded otherwise only because their conclusions have belied their findings

the global economy as instituted process the case of central and eastern europe i argue that economic globalization indicated by the tremendous rise in world foreign direct investment fdi in recent decades is not driven simply by investor considerations of economic risk and return but is significantly shaped by the construction of demand for foreign capital by receiving states states signal this demand through the levels of formal and substantive legitimacy they grant to fdi they institutionalize globalization in formal rule as a normatively desirable development strategy states substantiate this commitment by providing domestic and foreign actors with ideational and organizational resources to facilitate fdi to illustrate this argument i use the case of central and eastern europe which was largely closed to global capital before the collapse of communism analyses of quantitative and qualitative data show that substantive legitimacy granted to fdi by host states more than formal regulations determined the size of foreign capital flows into postsocialist countries in the

does the law of one price really hold for commodity prices in spite of the empirical failure of the law of one price it is usually assumed that commodity prices are perfectly arbitraged at least in the long run this paper argues that this assumption is counterfactual and that much of the empirical evidence provided to support it is flawed and affected by econometric shortcomings spurious regressions nonstationarity in the data inappropriate use of first differences an alternative methodology co integration by which a long run relationship between nonstationary series can be tested is proposed tests of nonstationarity and co integration for a group of commodities show quite uniformly that the law of one price as a long run relationship fails and that deviations from the pattern are permanent

foreign firms and chinese employment this paper examines the effect of foreign direct investment fdi on employment in the chinese manufacturing sector as one of the world s largest recipients of fdi china has arguably benefited from foreign multinational enterprises in various respects however one of the main challenges for china and other developing countries is job creation and the effect of fdi on employment is uncertain the effect depends on the amount of jobs created within foreign firms as well as the effect of fdi on employment in domestic firms we analyse fdi and employment in china using a large sample of manufacturing firms for the period 1998 2004 our results show that fdi has positive effects on employment growth the relatively high employment growth in foreign firms is associated with their firm characteristics and their high survival rate employment growth is also relatively high in private domestic chinese firms there also seems to be a positive indirect effect of fdi on employment in private domestically owned firms presumably caused by spillovers

which exchange rates matter for fdi evidence for japan using industry level data for japanese foreign direct investment fdi flows to five asian countries we investigate how the sensitivity of fdi to the exchange rate changes across different industry types and exchange rate indices key results are as follows i aggregated fdi data reported at the national level are insufficient for analysis and industry level data are required ii pooling industries by export orientation reveals heterogeneity in the response of different types of fdi to the exchange rates and iii alternative exchange rate measures particularly the competitor weighted exchange rate perform better for export oriented fdi we use our results to address key conflicts in the literature on exchange rates and fdi

exchange rates and competition for fdi in asia this paper argues that relative exchange rates between the host countries of foreign direct investment affect their competition for fdi specifically if the host country currency appreciates against the source country s currency more than that of its rival fdi inflows of the host country will decrease while fdi inflows increase in the rival country using the data of japanese fdi in nine asian manufacturing sectors from 1981 to 2002 the paper examines the hypothesis in the context of the competition between china and asean 4 indonesia malaysia the philippines and thailand empirical results show that the relative exchange rate is a statistically significant factor that determines the relative inflows of japanese fdi for manufacturing as a whole and for such sub sectors as textiles food electronics transportation equipment and others exchange rate policies of china and asean 4 played a critical role in dynamically reshaping the geographic distribution of japanese fdi in asia

the timing and probability of fdi an application to us multinational enterprises an option pricing model is employed to analyse the timing of fdi assuming that the firm s profits are determined by the attractiveness of both the home and foreign countries and that attractiveness follows a brownian motion an optimal trigger value of fdi is derived the model shows that contrary to the npv rule fdi entry should be delayed the greater the uncertainty of attractiveness in both locations another important result is that mnes do not regard fdi as a risk diversification tool the results of the model were then tested empirically with us fdi data using labour costs as a proxy for the reciprocal of attractiveness the results support the findings of the analytical model

cross border mergers and acquisitions does the exchange rate matter some evidence for canada theoretical and empirical studies investigating the relationship between the exchange rate and fdi have generated mixed results using bilateral canadian u s industry level count data on cross border mergers and acquisitions m as and conditioning on industry tariff rates value added share of industries industry m a trend activity and the number of establishments we find evidence that a real dollar depreciation of the home currency leads to an increase in the probability of foreign m as but only in high r d industries these empirical results are consistent with blonigen s asset acquisition hypothesis results on european m as of canadian firms also lean towards this result les etudes theoriques et empiriques de la relation entre taux de change et investissement direct a l etranger donnent des resultats mixtes a l aide de donnees bilaterales canado americaines au niveau de l industrie pour les fusions et acquisitions f a transfrontalieres et de certaines conditions imposees aux tarifs douaniers au niveau industriel a la part de la valeur ajoutee des industries a la tendance des f a au niveau industriel et au nombre des etablissements on montre qu une depreciation de la devise nationale en termes de dollars reels entraine un accroissement de la probabilite de f a etrangeres mais seulement dans les industries a forte intensite de r d ces resultats empiriques sont compatibles avec l hypothese d acquisition d actifs de blonigen les resultats quant aux f a europeennes de firmes canadiennes tendent a supporter ce resultat