International Competition for Multinational Investment

J.I. Haaland and Ian Wooton ()

Working Papers from Norwegian School of Economics and Business Administration-

Abstract: We examine the economic justification for providing investment subsidies to foreign-owned multinationals. These provide employment opportunities and generate demand for domestic intermediate inputs, produced by domestic workers with increasing returns to scale. Offering subsidies to multinationals may be in the national interest if the investment raises the net value of domestic production. When agglomerative forces are sufficiently strong, a subsidy that attracts the first foreign firm may induce several to enter, establishing a thriving modern sector. With a limited number of foreign enterprises, countries may compete to attract investment. This subsidy competition transfers much of the rents to the multinationals.

Keywords: INVESTMENTS; INDUSTRIAL LOCATION; TRANSNATIONAL CORPORATIONS (search for similar items in EconPapers)
JEL-codes: F12 F23 (search for similar items in EconPapers)
Pages: 26 pages
Date: 1998
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: International Competition for Multinational Investment (1999)
Working Paper: International Competition for Multinational Investment (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:norgee:14/98

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