Multinationals and Industrial Policy

Giorgio Barba Navaretti () and Anthony Venables

No 352, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: Are there benefits to the host country from multinational investments? Does potential value from these investments make active industrial policy worthwhile? We answer the first question affirmatively, having reviewed economic principles and evidence concerning the effects of projects locating in (or not being off-shored from) a country. On the second, policy can have a limited effect in influencing location decisions, but it is doubtful that it is cost effective. Implementation faces lack of information, risk of capture and, in many cases, non-rigorous processes. Competition between jurisdictions means that much policy is investment diversion not investment creation. There is a case for supra-national controls (as with EU State Aid regulations), for policy to be used only for well-defined market failures, and for better implementation and more rigorous ex-ante appraisal and ex-post evaluation.

Keywords: Multinational Corporations; Industrial Policy (search for similar items in EconPapers)
Pages: 24
Date: 2013-04-24, Revised 2013-04-24
New Economics Papers: this item is included in nep-ppm
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Citations: View citations in EconPapers (3)

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Journal Article: Multinationals and industrial policy (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:csl:devewp:352

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