search query: @indexterm FOREIGN INVESTMENT / total: 1949
reference: 123 / 1949
| Author: | Skaksen, M.R. |
| Title: | Should governments subsidise inward foreign direct investment? |
| Journal: | Scandinavian Journal of Economics
2005 : VOL 107:1, p. 123-140 |
| Index terms: | Foreign investment Direct investment Labour markets Public sector Subsidies Models |
| Freeterms: | FDI |
| Language: | eng |
| Abstract: | What happens when a government has incentives to subsidise inward foreign direct investment (FDI) when labour markets are imperfectly competitive? Contrary to the traditional assumption, in this study the production in the multinational firm is allowed to either complement or substitute for local production. A new result is that the wage in the host country may decrease when production is moved to this country. This is due to the fact that the union in the host country internalizes product market externalities btw. the firms. Furthermore, it is shown that when a single country subsidises inward FDI, total world welfare might increase. |
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