FDI policies under shared factor markets

Amy Jocelyn Glass and Kamal Saggi

Chapter 24 in Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, 2023, pp 543-566 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We examine the consequences of foreign direct investment (FDI) policies in a general equilibrium setting with several oligopolistic industries. By shifting labor demand across countries, FDI raises the wage in the host country and lowers the wage in the source country, thereby raising profits of source country firms at the expense of host country firms. The extent of cross-ownership of firms, the relative number of firms and the relative supply of skilled labor alter the impact of FDI policy on national welfare. The tension between profits and wages determines whether the optimal policy is designed to encourage FDI.

Keywords: International Technology Transfer; Multinational Firms; Trips; Foreign Direct Investment; Oligopolistic Competition; Vertical Contracts; Intellectual Property Rights (search for similar items in EconPapers)
JEL-codes: F21 (search for similar items in EconPapers)
Date: 2023
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