Gains from FDI inflows with incomplete information. (Q1853712)
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English | Gains from FDI inflows with incomplete information. |
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Gains from FDI inflows with incomplete information. (English)
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22 January 2003
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The paper develops an international macroeconomic model of FDI flows with a unique feature: a hands-on management ability to react in real time to changing economic environments. Anticipating this advantage, foreign direct investors can outbid other investors in a certain industry in which they specialize in the source country. The model can explain both two-way FDI flows among developed countries and one-way FDI flows from developed to developing countries. The unique gains from FDI to the host country stem from the increased efficiency of domestic investment.
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FDI vs Portfolio
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Free-rider problem
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Control
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Gains-from-capital inflows
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Asymmetric information
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