Laura Alfaro of Harvard University reviews “Foreign Direct Investment: Analysis of Aggregate Flows” by Assaf Razin, Efraim Sadka,. The EconLit Abstract of the reviewed work begins “Analyzes the macroeconomics of foreign direct investment (FDI), treating it as a unique form of international capital flow between specific pairs of countries. Discusses FDI and foreign portfolio investment--theory and evidence; foreign versus domestic direct investment--cream-skimming; FDI flows with endogenous domestic wages--heterogeneous firms; country-specific aggregate shocks--the representative firm; an overview of the econometric equations; application to a baseline sample--ordinary least squares, Tobit, and the Heckman selection models; productivity shocks; source and host corporate tax rates; and tax competition and coordination. Razin is Bernard L. Schwartz Chair for the Study of Global Competitive Markets at Tel Aviv University and Friedman Professor of International Economics at Cornell University. Sadka is Henry Kaufman Professor of International Capital Markets at Tel Aviv University. Bibliography; index.”
Export-Platform Foreign Direct Investment: Theory and Evidence