Citation

Discussion Paper Details

Please find the details for DP1937 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: International Competition for Multinational Investment

Author(s): Jan I. Haaland and Ian Wooton

Publication Date: July 1998

Keyword(s): Foreign Direct Investment, Location, Multinationals and policy competition

Programme Area(s): International Trade and Regional Economics

Abstract: We examine the economic justification for providing investment subsidies to foreign-owned multinationals. These provide employment opportunities and generate demand for domestic intermediate inputs, produced by domestic workers with increasing returns to scale. Offering subsidies to multinationals may be in the national interest if the investment raises the net value of domestic production. When agglomerative forces are sufficiently strong, a subsidy that attracts the first foreign firm may induce several to enter, establishing a thriving modern sector. With a limited number of foreign enterprises, countries may compete to attract investment. This subsidy competition transfers much of the rents to the multinationals.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1937

Bibliographic Reference

Haaland, J and Wooton, I. 1998. 'International Competition for Multinational Investment'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1937