Capital Controls and Firm's Dynamics

2011 ◽  
pp. 235-267
Author(s):  
Alexei G. Orlov
Keyword(s):  
Foreign Direct Investment ◽  
Steady State ◽  
Direct Investment ◽  
Multinational Enterprise ◽  
Capital Controls ◽  
Developed Countries ◽  
Foreign Subsidiaries ◽  
Capital Control ◽  
Negative Effects ◽  
The Us

This chapter constructs a dynamic model of a multinational enterprise (MNE) to quantify the effects of various capital control policies on a firm’s debt and equity positions, innovations, and outputs at the headquarters and subsidiary. The model is calibrated to the US Foreign Direct Investment (FDI) Benchmark Survey and the IMF’s Exchange Arrangements and Exchange Restrictions so that it reproduces the average US FDI and technology flows to foreign subsidiaries. Both steady-state and transition analyses suggest a significant impact of capital controls on an MNE’s operations. Lifting capital restrictions produces an inflow of capital and technology into the less developed countries, leading to an increase in the steady-state FDI position and production. Simulation experiments reveal that even short-term capital controls have long-lasting negative effects.

A Physics of Organizational Uncertainty

2011 ◽  
pp. 268-289 ◽  
Author(s):  
W. F. Lawless ◽  
M. Bergman ◽  
N. Feltovich
Keyword(s):  
Foreign Direct Investment ◽  
Steady State ◽  
Direct Investment ◽  
Multinational Enterprise ◽  
Capital Controls ◽  
Developed Countries ◽  
Foreign Subsidiaries ◽  
Negative Effects ◽  
The Us ◽  
Organizational Uncertainty

This chapter constructs a dynamic model of a multinational enterprise (MNE) to quantify the effects of various capital control policies on a firm’s debt and equity positions, innovations, and outputs at the headquarters and subsidiary. The model is calibrated to the US Foreign Direct Investment (FDI) Benchmark Survey and the IMF’s Exchange Arrangements and Exchange Restrictions so that it reproduces the average US FDI and technology flows to foreign subsidiaries. Both steady-state and transition analyses suggest a significant impact of capital controls on an MNE’s operations. Lifting capital restrictions produces an inflow of capital and technology into the less developed countries, leading to an increase in the steady-state FDI position and production. Simulation experiments reveal that even short-term capital controls have long-lasting negative effects.

scholarly journals Technology Capital and the US Current Account

2010 ◽  
Vol 100 (4) ◽  
pp. 1493-1522 ◽  
Author(s):  
Ellen R McGrattan ◽  
Edward C Prescott
Keyword(s):  
Foreign Direct Investment ◽  
Equilibrium Model ◽  
Direct Investment ◽  
Essential Role ◽  
Multinational Companies ◽  
Foreign Subsidiaries ◽  
Economic Statistics ◽  
Intangible Investments ◽  
The Us ◽  
The Difference

The US Bureau of Economic Analysis (BEA) estimates that the return on investments of foreign subsidiaries of US multinational companies over the period 1982–2006 averaged 9.4 percent annually after taxes; US subsidiaries of foreign multinationals averaged only 3.2 percent. BEA returns on foreign direct investment (FDI) are distorted because most intangible investments made by multinationals are expensed. We develop a multicountry general equilibrium model with an essential role for FDI and apply the BEA's methodology to construct economic statistics for the model economy. We estimate that mismeasurement of intangible investments accounts for over 60 percent of the difference in BEA returns. (JEL F23, F32)

Foreign Direct Investment, Intellectual Property Rights, and Productivity Growth

2014 ◽  
Vol 05 (03) ◽  
pp. 1440009
Author(s):  
Sasatra Sudsawasd ◽  
Santi Chaisrisawatsuk
Keyword(s):  
Foreign Direct Investment ◽  
Intellectual Property ◽  
Property Rights ◽  
Intellectual Property Rights ◽  
Productivity Growth ◽  
Direct Investment ◽  
Developed Countries ◽  
Outward Fdi ◽  
The Impact ◽  
Ipr Protection

Using panel data for 57 countries over the period of 1995–2012, this paper investigates the impact of intellectual property rights (IPR) processes on productivity growth. The IPR processes are decomposed into three stages — innovation process, commercialization process, and protection process. The paper finds that better IPR protection is directly associated with productivity improvements only in developed economies. In addition, the contribution of IPR processes on growth through foreign direct investment (FDI) appears to be quite limited. Only inward FDI in developed countries which creates better innovative capability leads to higher growth. In connection with outward FDI, only the increase in IPR protection and commercialization are proven to improve productivity in the case of developing countries, particularly when the country acts as the investing country.

scholarly journals Is Russia successful in attracting foreign direct investment? Evidence based on gravity model estimation

2016 ◽  
Vol 16 (3) ◽  
pp. 245-267 ◽  
Author(s):  
Oleg Mariev ◽  
Igor Drapkin ◽  
Kristina Chukavina
Keyword(s):  
Foreign Direct Investment ◽  
Gravity Model ◽  
Host Country ◽  
Direct Investment ◽  
Recipient Country ◽  
Developed Countries ◽  
Likelihood Method ◽  
Empirical Estimation ◽  
Fdi Inflows ◽  
Russian Economy

Abstract The aim of this paper is twofold. First, it is to answer the question of whether Russia is successful in attracting foreign direct investment (FDI). Second, it is to identify partner countries that “overinvest” and “underinvest” in the Russian economy. We do this by calculating potential FDI inflows to Russia and comparing them with actual values. This research is associated with the empirical estimation of factors explaining FDI flows between countries. The methodological foundation used for the research is the gravity model of foreign direct investment. In discussing the pros and cons of different econometric methods of the estimation gravity equation, we conclude that the Poisson pseudo maximum likelihood method with instrumental variables (IV PPML) is one of the best options in our case. Using a database covering about 70% of FDI flows for the period of 2001-2011, we discover the following factors that explain the variance of bilateral FDI flows in the world economy: GDP value of investing country, GDP value of recipient country, distance between countries, remoteness of investor country, remoteness of recipient country, level of institutions development in host country, wage level in host country, membership of two countries in a regional economic union, common official language, common border and colonial relationships between countries in the past. The potential values of FDI inflows are calculated using coefficients of regressors from the econometric model. We discover that the Russian economy performs very well in attracting FDI: the actual FDI inflows exceed potential values by 1.72 times. Large developed countries (France, Germany, UK, Italy) overinvest in the Russian economy, while smaller and less developed countries (Czech Republic, Belarus, Denmark, Ukraine) underinvest in Russia. Countries of Southeast Asia (China, South Korea, Japan) also underinvest in the Russian economy.

The Rise of Transnational Corporations from Developing Countries in the Second Half of the 20th Century

Istoriya ◽  
2021 ◽  
Vol 12 (11 (109)) ◽  
pp. 0
Author(s):  
Alexey Kuznetsov
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Global Economy ◽  
World Order ◽  
Developed Countries ◽  
Global South ◽  
Business Environment ◽  
Outward Foreign Direct Investment ◽  
Foreign Direct Investment Stock

The article highlights three stages of the formation of multinationals from developing countries. Although first Argentine TNCs appeared at the turn of the 19th — 20th centuries, in the majority of the Global South countries TNCs appeared in the 1960s — 1980s. With the collapse of the bipolar world order, which in many developing countries was accompanied by significant internal political and economic transformations, the second stage of foreign expansion of TNCs from the Global South began. Indeed, in 1990 they accounted for 6 % of global outward foreign direct investment stock, while the figure was 10 % by the end of 2005. We date the beginning of the third stage to the financial and economic crisis of 2007—2009, since multinationals from developing countries as a whole are more successfully overcoming the period of turbulence in the global economy. By the end of 2020, they accounted for 22 % of global outward foreign direct investment stock, and during the COVID-19 pandemic crisis they generally exported more than 50% of the capital. The modern foreign expansion of such TNCs has many reasons, differs greatly from country to country, and often differs slightly from the specifics of Western multinationals. At the same time, initially, “late internationalization” in developing countries had two main vectors — the use of new opportunities for South — South cooperation and overcoming, through the creation of subsidiaries in highly developed countries, the shortcomings of the business environment of “catching up” countries.

Foreign direct investment as a factor of technological development of the national economy

2020 ◽  
pp. 226-232
Author(s):  
М.Я. Веселовский ◽  
Т.В. Погодина
Keyword(s):  
Foreign Direct Investment ◽  
Capital Accumulation ◽  
Direct Investment ◽  
Technological Development ◽  
Developed Countries ◽  
External Effects ◽  
Important Condition ◽  
Strategic Factor ◽  
Advanced Technologies ◽  
Methodological Approaches

Привлечение инвестиций является стратегическим фактором и важным условием обеспечения динамичного социально-экономического и инновационно-технологического развития стран и регионов. В процессе исследования систематизированы факторы, условия и стимулы, оказывающие непосредственное воздействие на привлечение прямых иностранных инвестиций в экономику экономически развитых стран и России. Теоретически обосновано наличие внешних эффектов от привлечения прямых иностранных инвестиций, которые подразделяются на горизонтальные (внутриотраслевые и внутрирегиональные), вертикальные (межотраслевые и межрегиональные) эффекты. На основе анализа динамики иностранного инвестирования в экономику российских регионов выявлено, что в большей степени в России проявляются горизонтальные внешние эффекты. Исследованы тенденции валового накопления основного капитала в разрезе различных стран, на основе которых в целом прямые иностранные инвестиции повышают уровень конкуренции, способствуют внедрению современных управленческих решений и прогрессивных технологий. Предложены методические подходы по повышению инвестиционной привлекательности отраслей и регионов для инвесторов. ttracting investment is a strategic factor and an important condition for ensuring the dynamic socio-economic and innovative-technological development of countries and regions. The study systematizes factors, conditions and incentives that have a direct impact on attracting foreign direct investment in the economy of economically developed countries and Russia. Theoretically, the presence of external effects from attracting foreign direct investment, which are divided into horizontal (intra-industry and intra-regional), vertical (inter-industry and interregional) effects, is proved. Based on the analysis of the dynamics of foreign investment in the economy of Russian regions, it is revealed that horizontal external effects are more pronounced in Russia. The trends of gross fixed capital accumulation in the context of various countries are studied, on the basis of which, in General, foreign direct investment increases the level of competition, contributes to the introduction of modern management solutions and advanced technologies. Methodological approaches are proposed to increase the investment attractiveness of industries and regions for investors.

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