The effects of multinationals on host economies: A CGE approach

María C. Latorre (), Oscar Bajo-Rubio () and Antonio Gómez Gómez-Plana ()

Economic Modelling, 2009, vol. 26, issue 5, pages 851-864

Abstract: This paper offers a new perspective regarding the effects on a host economy of the entry of multinational enterprises (MNEs). We use a computable general equilibrium (CGE) approach, through a version of the Global Trade Analysis Project (GTAP) model extended to incorporate MNEs. The analysis is applied to the Czech Republic, a country that has received substantial inflows of foreign direct investment in the last few years. A special attention has been paid to the issue of profit repatriation. We find that the negative effects of profit repatriation are sizeable, and might even offset the positive impact of the entry of MNEs.

Keywords: Multinational; enterprises; Foreign; direct; investment; Computable; general; equilibrium; Profit; repatriation; Czech; Republic (search for similar items in EconPapers)
Date: 2009
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Persistent link: http://EconPapers.repec.org/RePEc:eee:ecmode:v:26:y:2009:i:5:p:851-864

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