FDI flows grew exponentially during the 1990s, experienced a sharp decline over the period 20012004, and have recently started to recover. The decline was mostly due to a fall in FDI flows within the OECD, particularly of FDI flows to continental Europe. In recent years, FDI flows to developing countries have also increased substantially. This trend has been encouraged by governments who view i...

With the initiation of globalization, developing countries, particularly those in Asia, have been witnessing a immense surge of FDI inflows during the past two decades. Even though India has been a latecomer to the FDI scene compared to other East Asian countries, its considerable market potential and a liberalized policy regime has sustained its attraction as a favourable destination for forei...

The main focus of this review is on international trade and foreign direct investment when the institutions that provide the security of property rights and enforcement of contracts are imperfect. Some issues of national security related to poor governance of international transactions are also considered. The discussion organizes a selective overview of the literature and offers some suggestio...

We analyze a two-country model of Foreign Direct Investment (FDI). Two firms, each of which is originally situated in only one of the two countries, first decide whether to build a plant in the foreign country. Then, they decide whether to relocate R&D activities. Finally, they engage in product-market competition. Our main points are: first, FDI liberalization causes a relocation of R&D activi...

We examine the effects of mergers and internal groups (lobbies) in shaping national policies towards foreign direct investment. Lobbying is modeled following the political contributions approach. In this work we develop a partial equilibrium model of an oligopolistic industry in which a number of domestic and foreign firms compete in the market for a homogeneous good in a host country. It is as...

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By reviewing the existing literature and empirical investigation, we build a socalled Photosynthesis model which argues that a recipient developing country only achieves benefits from FDI once they have sufficient absorptive capacity related to human capital resource, absorptive capacity of domestic firm, financial systems, physical infrastructure, technological, and institutional development. ...

This paper investigates the productivity effects of inward and outward foreign direct investment using industry and country level data for 17 OECD countries over the period 1973 to 2001. Controlling for national and international knowledge spillovers we argue that effects of FDI work through direct compositional effects as well as changing competition in the host country. Our results show that ...