Citation

Discussion Paper Details

Please find the details for DP3775 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: The Economics of Foreign Direct Investment Incentives

Author(s): Magnus Blomström and Ari Kokko

Publication Date: February 2003

Keyword(s): Foreign direct investment and investment incentives

Programme Area(s): International Trade and Regional Economics

Abstract: This Paper suggests that the use of investment incentives focusing exclusively on foreign firms - although motivated in some cases from a theoretical point of view - is generally not an efficient way to raise national welfare. The main reason is that the strongest theoretical motive for financial subsidies to inward FDI ? spillovers of foreign technology and skills to local industry ? is not an automatic consequence of foreign investment. The potential spillover benefits are realized only if local firms have the ability and motivation to invest in absorbing foreign technologies and skills. To motivate subsidization of foreign investment, it is therefore necessary, at the same time, to support learning and investment in local firms as well.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3775

Bibliographic Reference

Blomström, M and Kokko, A. 2003. 'The Economics of Foreign Direct Investment Incentives'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3775