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Parental Supervision: The New Paradigm for Foreign Direct Investment and Development
     

Parental Supervision: The New Paradigm for Foreign Direct Investment and Development

by Theodore H. Moran
 

ISBN-10: 0881323136

ISBN-13: 9780881323139

Pub. Date: 08/28/2001

Publisher: Peterson Institute for International Economic

Parental Supervision amplifies the research Theodore Moran first presented in Foreign Direct Investment and Development (1998), assessing the opportunities and dangers that foreign direct investment may present to the growth of developing countries. Moran uses almost 50 percent more case studies than the earlier work to examine two types of foreign

Overview

Parental Supervision amplifies the research Theodore Moran first presented in Foreign Direct Investment and Development (1998), assessing the opportunities and dangers that foreign direct investment may present to the growth of developing countries. Moran uses almost 50 percent more case studies than the earlier work to examine two types of foreign investments: (1) those that are tightly integrated into the parent firm's strategy and (2) those that are hindered by joint-venture and domestic-content requirements. The study is a comparison between these two types of foreign operations how backward linkages to local suppliers, operations of local affiliates, and the spillovers and externalities in the host economy differ from one type of foreign operation to the other. In tightly integrated networks, not only is the performance of local affiliates superior and upgraded more continuously, but also, surprisingly, the backward linkages from the affiliates to local suppliers tend to be larger and more robust. Moran reviews contemporary efforts to measure the impact of simultaneous trade and investment liberalization on host country welfare, finding that the magnitude of both the benefits and the costs may be far greater than conventional wisdom suggests.

Product Details

ISBN-13:
9780881323139
Publisher:
Peterson Institute for International Economic
Publication date:
08/28/2001
Series:
Policy Analyses in International Economics Series
Edition description:
New Edition
Pages:
100
Product dimensions:
6.08(w) x 8.96(h) x 0.21(d)
Age Range:
18 Years

Table of Contents

Prefaceix
Acknowledgmentsxiii
Introduction1
1The Product Cycle Model of Foreign Direct Investment, Multinational Corporate Strategy, and Parent Control3
2Operations That Fit into the Product Cycle Model of Control and Supervision7
Characteristics of the Affiliates Themselves7
Backward Linkages15
Spillovers and Externalities24
3Operations That Do Not Fit into the Product Cycle Model of Control and Supervision: Investments with Domestic-Content, Joint-Venture, and Technology-Sharing Mandates Imposed by the Host31
Characteristics of the Affiliates Themselves32
Backward Linkages38
Externalities40
4Implications for Measuring the Impact of Foreign Direct Investment on Development41
The Dangers of Mismeasuring the Impact of Foreign Direct Investment41
Appraising the Impact of Foreign Direct Investment on Host Countries Within the Context of Endogenous Growth Theory44
Estimating the Impact of Rationalization and "Derationalization" of Production by Multinational Firms Across Borders49
Assessing the Spread of Backward Linkages from Foreign Affiliates to Local Suppliers53
Evaluating Spillovers and Externalities from Foreign Investors to the Host Economy55
5Policy Implications for Host Authorities61
Implications for Host Country Policies Toward Foreign Direct Investment61
Implications for Host Country Policies Toward Trade-and-Investment Negotiations63
References67
Index75
Tables
Table 4.1Alternative estimates of the impact of investment liberalization58
Table 5.1Schematic comparison of foreign affiliates closely integrated into the parent's global sourcing network with foreign affiliates that are not62

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