The Economics of Foreign Direct Investment Incentives / Magnus Blomstrom, Ari Kokko.

Format:

Book

Author/Creator:

Blomstrom, Magnus.

Contributor:

National Bureau of Economic Research.

Kokko, Ari.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9489.

NBER working paper series no. w9489

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

This paper suggests that the use of investment incentives focusing exclusively on foreign firms, although motivated in some cases from a theoretical point of view, is generally not an efficient way to raise national welfare. The main reason is that the strongest theoretical motive for financial subsidies to inward FDI spillovers of foreign technology and skills to local industry is not an automatic consequence of foreign investment. The potential spillover benefits are realized only if local firms have the ability and motivation to invest in absorbing foreign technologies and skills. To motivate subsidization of foreign investment, it is therefore necessary, at the same time, to support learning and investment in local firms as well.

Notes:

Print version record

February 2003.