The purpose of this paper is to investigate the intertemporal linkages between FDI and disaggregated measures of international trade. We outline a model exemplifying some of these linkages, describe several methods for investigating two-way feedbacks between various categories of trade, and apply them to the recent experience of developing countries. After controlling for other macroeconomic an...

Although the theory of multinational banking has pointed out the importance of local profit opportunities, the empirical evidence is still poor and deserves further investigation. To this end, we analyse entry decisions and activity levels of foreign banks operating in Italy between 1983 and 1998. We consider 22 OECD countries, 10 of which had at least one bank (branch or subsidiary) in Italy. ...

This paper sets up a two country monopolistic competition model with intra-industry trade to study the effects of an exogenous differential in wage and social policies on the location of industry. Two model scenarios are considered. In the traditional one with physical capital, such a differential induces a relocation effect which increases with the level of trade integration. The ‘new economic...

In this paper we examine entry decision of a foreign firm when the input market in the host-country is imperfect competitive and production requires non-tradable inputs. We show that the foreign firm’s strategic choice about FDI and export may affect the price of input in the host-country significantly and provides a rationale for doing both FDI and export at the same time. So, unlike the previ...

Although FDI is widely believed to have a positive effect on economic growth, the exact mechanism of how FDI impacts upon the development process of the newly industrialising economies is far from being well understood. This paper presents and tests two propositions on the role of FDI in economic growth from a newly industrialising economy’s perspective. First, FDI is a mover of production effi...

This paper investigates an unexplored rationale for organizations to enter into joint ventures. After a review of the theoretical and empirical literature on joint ventures, it develops a model in which projects require investments over time under conditions of autocorrelated productivity shocks. Internal and external interest groups are likely to pressurize owners into paying out early revenue...

This paper analyzes the effectiveness of controls on capital inflows. In particular, we analyze in great detail the Chilean experience with the use of the unremunerated reserve requirement. We examine the effects of the controls applied in Chile in 1991–98 on interest rates, real exchange rate, and the volume and composition of capital inflows. The effects are elusive and it is difficult to pin...

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 addi...