scholarly journals US Environmental Regulation and FDI: Evidence from a Panel of US-Based Multinational Firms

2010 ◽  
Vol 2 (3) ◽  
pp. 158-189 ◽  
Author(s):  
Rema Hanna
Keyword(s):  
Foreign Investment ◽  
Multinational Firms ◽  
Clean Air Act ◽  
Econometric Models ◽  
Substantial Variation ◽  
Firm Level ◽  
Level Data ◽  
Regulated Firms ◽  
Firm Level Data ◽  
Clean Air

This paper measures the response of US-based multinationals to the Clean Air Act Amendments (CAAA). Using a panel of firm-level data over the period 1966–1999, I estimate the effect of regulation on a multinational's foreign production decisions. The CAAA induced substantial variation in the degree of regulation faced by firms, allowing for the estimation of econometric models that control for firm-specific characteristics and industrial trends. I find that the CAAA caused regulated multinational firms to increase their foreign assets by 5.3 percent and their foreign output by 9 percent. Heavily regulated firms did not disproportionately increase foreign investment in developing countries. (JEL F23, K32, L51, Q52, Q53, Q58)

How does the globalization of firms affect corruption in developing economies?

2017 ◽  
Vol 21 (3) ◽  
pp. 256-270 ◽  
Author(s):  
Bokyeong Park ◽  
Onon Khanoi
Keyword(s):  
Foreign Investment ◽  
Developing Economies ◽  
Probit Model ◽  
Policy Implications ◽  
Firm Level ◽  
Content Type ◽  
Exporting Firms ◽  
Country Level ◽  
Level Data ◽  
Firm Level Data

Purpose The purpose of this paper is to examine how firms’ characteristics related to globalization affect their perception on corruption and actual experiences in bribery. It focuses on two indicators of globalization, namely, foreign ownership and export, and confines the scope to developing economies. Design/methodology/approach This analysis uses firm-level data with observation over 60,000 collected from 94 developing economies. The paper employs the probit model to examine how firm characteristics related to globalization affect corruption perception (CP) and incidence. Findings The empirical results reveal that for foreign-invested companies, there is a substantial discrepancy between the perceived corruption and the actual. Although they are involved in bribery as frequently as, or less frequently than local firms, they have greater CPs. Exporting firms are more frequently solicited for bribes, but the effect disappears when time spent for government contact is controlled for. Consequently, foreign investment partly contributes to the corruption control, but the export orientation of firms rather aggravates corruption due to regulative environments in developing economies. Practical implications This study provides policy implications that the corruption control through globalization requires streamlining of administration procedure related to foreign investment or trade and, thus, shortening time to deal with public officials. In addition, governments need to emphasize the importance of foreign investment and prevent unethical practices mediated by local partners. Originality/value The greatest novelty of this paper lies in using firm level data instead of country level unlike most of the literature. Moreover, the authors focus on firms only in developing economies. As well, unlike most studies using only perception indicators as the proxy of corruption, this paper considers both CPs and actual incidence, and compares each other.

The Differential Effects of Bilateral Tax Treaties

2014 ◽  
Vol 6 (2) ◽  
pp. 1-18 ◽  
Author(s):  
Bruce A. Blonigen ◽  
Lindsay Oldenski ◽  
Nicholas Sly
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Multinational Firms ◽  
Tax Treaties ◽  
Double Taxation ◽  
Firm Level ◽  
Differential Effects ◽  
Level Data ◽  
Firm Level Data ◽  
Positive Effect

Bilateral tax treaties (BTTs) are intended to promote foreign direct investment through double-taxation relief. Using BEA firm-level data, we find a positive effect of BTTs on FDI, which is larger for firms that use differentiated inputs. BTTs allow multinational firms to request assistance from treaty partners' governments if they have a grievance about how tax liabilities are determined. These provisions disproportionately benefit firms that use inputs for which an arm's-length price is difficult to observe, since allocation of earnings across countries is more complex. We find differential BTT effects for both sales by existing affiliates and entry of new affiliates. (JEL F23, H25, H87)

scholarly journals Global Production with Export Platforms*

2016 ◽  
Vol 132 (1) ◽  
pp. 157-209 ◽  
Author(s):  
Felix Tintelnot
Keyword(s):  
General Equilibrium ◽  
Host Country ◽  
Foreign Investment ◽  
Multinational Firms ◽  
Multinational Enterprise ◽  
Fixed Costs ◽  
Firm Level ◽  
Level Data ◽  
Multinational Production ◽  
Foreign Affiliates

Abstract Most international commerce is carried out by multinational firms, which use their foreign affiliates both to serve the market of the host country and to export to other markets outside the host country. In this article, I examine the determinants of multinational firms’ location and production decisions and the welfare implications of multinational production. The few existing quantitative general equilibrium models that incorporate multinational firms achieve tractability by assuming away export platforms—that is, they do not allow foreign affiliates of multinationals to export—or by ignoring fixed costs associated with foreign investment. I develop a quantifiable multicountry general equilibrium model, which tractably handles multinational firms that engage in export platform sales and that face fixed costs of foreign investment. I first estimate the model using German firm-level data to uncover the size and nature of costs of multinational enterprise and show that the fixed costs of foreign investment are large. Second, I calibrate the model to data on trade and multinational production for twelve European and North American countries. Counterfactual analysis reveals that multinationals play an important role in transmitting technological improvements to foreign countries and that the pending Canada-EU trade and investment agreement could divert a sizable fraction of the production of EU multinationals from the U.S. to Canada.

The Gravity of Knowledge

2013 ◽  
Vol 103 (4) ◽  
pp. 1414-1444 ◽  
Author(s):  
Wolfgang Keller ◽  
Stephen Ross Yeaple
Keyword(s):  
Knowledge Transfer ◽  
Multinational Firms ◽  
Multinational Firm ◽  
Firm Level ◽  
Direct Communication ◽  
Multinational Activity ◽  
Level Data ◽  
Firm Level Data ◽  
Foreign Affiliates ◽  
Firm Model

We analyze the international operations of multinational firms to measure the spatial barriers to transferring knowledge. We model firms that can transfer bits of knowledge to their foreign affiliates in either embodied (traded intermediates) or disembodied form (direct communication). The model shows how knowledge transfer costs can be inferred from multinationals' operations. We use firm-level data on the trade and sales of US multinationals to confirm the model's predictions. Disembodied knowledge transfer costs not only make the standard multinational firm model consistent with the fact that affiliate sales fall in distance but quantitatively accounts for much of the gravity in multinational activity. (JEL F12, F14, F23, L25, O33)

DIRECT EFFECT OF INWARD FDI AND TARGET FIRM PERFORMANCE: EVIDENCE WITH CHINESE FIRM-LEVEL DATA

2019 ◽  
Vol 65 (04) ◽  
pp. 969-1005
Author(s):  
SE CHEN ◽  
MINGXIAN LI
Keyword(s):  
Foreign Investment ◽  
Causal Link ◽  
Target Firm ◽  
Firm Level ◽  
Greater China ◽  
Chinese Firm ◽  
Level Data ◽  
Firm Level Data ◽  
Different Origins ◽  
Economic Regions

This paper uses Chinese firm-level data from 2001 to 2007 and applies a propensity score matching method combined with a difference-in-differences approach to examine the direct causal link between inward foreign direct investment (FDI) and various aspects of Chinese firms’ performance. We divide China into four economic regions and subdivide the origin of foreign investment into HMT investment (within the Greater China Area) and other foreign investment (outside the Greater China Area). The results indicate that the progress of the IFDI market in China is not evenly balanced within the four economic regions, while the different origins of foreign investment produce different effects.

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