Foreign direct investment (FDI), as pointed out by Kindleberger, arises when the host country has an investment opportunity that it cannot exploit by itself because it lacks the means or technical know-how, or because of market incompleteness. A multinational corporation (MNC) may be able to exploit such an opportunity because it has the necessary capital, technology, and managerial skills to do so. In this article, the authors describe some stylized facts about expropriation episodes and other lessons learned from the empirical literature on FDI. The authors then summarize some of the main theories attempting to explain the effects of expropriation on investment and growth. Finally, they develop a theory that relates each type of expropriation to political instability and concentration...
Set the tone In order to clear up communications and stop filtering things coming up the line, you need top management to quit sugarcoating truths and using jargon where the plain truth would do. Kahn went to his employees and asked them to help cut down the company's bulky 64-word mission statement and the packets given at board meetings because both were thick, antiquated representations of how heavy company communications had become.
We analyze a scenario where a manufacturer with a traditional channel partner opens up a direct channel in competition with the traditional channel. We first consider that in order to mitigate channel conflict the manufacturer, who chooses wholesale prices as a Stackelberg leader, commits to setting a direct channel retail price that matches the retailer's price in the traditional channel. We find that the specific equal-pricing strategy that optimizes profits for the manufacturer is also preferred by the retailer and customers over other equal-pricing strategies. We next consider the implications of the equal-pricing constraint through a numerical experiment that indicates that the equal-pricing strategy is appropriate as long as the Internet channel is significantly less convenient th...
The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including residential direct heating equipment. In this final rule, the U.S. Department of Energy (DOE) is amending its definitions pertaining to direct heating equipment. Specifically, through this final rule, DOE is amending the definition of ``vented hearth heater,'' a type of direct heating equipment, to clarify the scope of the current exclusion for those vented hearth heaters that are primarily decorative hearth products. The amendment to the existing exclusion shifts the focus from a maximum input capacity limitation (i.e., 9,000 Btu/h) to a number of other factors, including the absence of a sta...
This paper examines the roles of foreign direct investment and financial development in the process of economic development using Thailand as the case study. We argue that better developed financial systems allow an economy to exploit the benefits of foreign direct investment more efficiently. The estimation draws upon an unrestricted error-correction model to avoid omitted lagged variable bias, and an instrumental variable estimator to correct for endogeneity bias. Using annual time series data from 1970 to 2004, the results show that financial development stimulates economic development whereas foreign direct investment impacts negatively on output expansion in the long run. However, an increased level of financial development enables Thailand to gain more from foreign direct investme...
This paper investigates a relationship between foreign direct investment (FDI) inflows, exchange rate, and economic growth of a developing country, and their effects on major economic activities in the nation. This paper examines macroeconomic activity variables of gross domestic product, fixed capital investment, employment ratio, retail trade turnover, industrial production, FDI inflows, and dollar exchange rate as a control variable. The macroeconomic activity statistics often calendar years (1997-2006) of Kazakhstan were analyzed by using a multivariate regression model with weighted least squares estimates. The results indicate that FDI has a minimum or not a statistically significant impact on GDP growth of Kazakhstan. The paper argues that a resource-seeking FDI has a minimal eff...
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