On the Intensity of International Subsidy Competition for FDI

Tomáš HAVRà Nek and Zuzana IRÅ Ovã
Additional contact information
Tomáš HAVRà Nek: Charles University and Czech National Bank, Prague
Zuzana IRÅ Ovã: Charles University, Prague
Authors registered in the RePEc Author Service: Tomas Havranek and Zuzana Irsova

Theoretical and Applied Economics, 2010, vol. 2(543), issue 2(543), 25-54

Abstract: The objective of this paper is to empirically assess the recently introduced models of subsidy competition based on the classical oligopoly theories. Three crucial scenarios (coordination, weak competition, and fierce competition) are tested employing iteratively re-weighted least squares, fixed effects, and dynamic Blundell-Bond estimator on the data from the World Competitiveness Yearbook. The results suggest that none of the scenarios can be strongly supported – although there is some weak support for cooperation –, and thus that empirical evidence is not in accordance with the tested models. There is no evidence for a significant international competition for FDI. It seems that, however, by means of FDI incentives, governments try to compensate foreign investors for high wages and low productivity of their countries’ labor force.

Keywords: investment incentives; foreign direct investment; panel data; subsidy competition. (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://store.ectap.ro/articole/440.pdf (application/pdf)
http://www.ectap.ro/articol.php?id=440&rid=58 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:agr:journl:v:2(543):y:2010:i:2(543):p:25-54

Access Statistics for this article

Theoretical and Applied Economics is currently edited by Mircea Dinu

More articles in Theoretical and Applied Economics from Asociatia Generala a Economistilor din Romania / Editura Economica Contact information at EDIRC.
Bibliographic data for series maintained by Mircea Dinu ().