Equity Control of Multinational Firms by Less Developed Countries: A General Equilibrium Analysis

John K Hill and Jose Mendez ()

The Manchester School of Economic & Social Studies, 1992, vol. 60, issue 1, 53-63

Abstract: This paper provides a general equilibrium analysis of the impact on local resource allocation and employment of laws which regulate the degree of local ownership of multinational subsidiaries. In the long run, equity controls cause multinational firms and national firms to reduce their employment of local labor. However, if some degree of regulation is already present, a marginal increase in the local equity participation rate can raise aggregate employment. For this to occur, the share of the total sales of multinational subsidiaries that represents pure profits must be small in relation to the share distributed as normal payments to capital. Copyright 1992 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:bla:manch2:v:60:y:1992:i:1:p:53-63

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