Capital controls, liberalizations, and foreign direct investement
By: Mihir A. Desai, C. Fritz Foley, James R. Hines Jr..
Contributors: Foley, C. Fritz.; Hines, James R.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10337; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10337.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "Affiliate-level evidence indicates that American multinational firms circumvent capital controls by adjusting their reported intrafirm trade, affiliate profitability, and dividend repatriations.  As a result, the reported profit impact of local capital controls is comparable to the effect of 24 percent higher corporate tax rates, and affiliates located in countries imposing capital controls are 9.8 percent more likely than other affiliates to remit dividends to parent companies.  Multinational affiliates located in countries with capital controls face 5.4 percent higher interest rates on local borrowing than do affiliates of the same parent borrowing locally in countries without capital controls.  Together, the costliness of avoidance and higher interest rates raise the cost of capital, significantly reducing the level of foreign direct investment.  American affiliates are 13-16 percent smaller in countries with capital controls than they are in comparable countries without capital controls.  These effects are reversed when countries liberalize their capital account restrictions"--National Bureau of Economic Research web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 1/19/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.