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Equity Control of Multinational Firms by Less Developed Countries: A General Equilibrium Analysis

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  • Hill, John K
  • Mendez, Jose A

Abstract

This paper provides a general equilibrium analysis of the impact on local resource allocation and employment of laws which regulate the degree of local ownership of multinational subsidiaries. In the long run, equity controls cause multinational firms and national firms to reduce their employment of local labor. However, if some degree of regulation is already present, a marginal increase in the local equity participation rate can raise aggregate employment. For this to occur, the share of the total sales of multinational subsidiaries that represents pure profits must be small in relation to the share distributed as normal payments to capital. Copyright 1992 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Hill, John K & Mendez, Jose A, 1992. "Equity Control of Multinational Firms by Less Developed Countries: A General Equilibrium Analysis," The Manchester School of Economic & Social Studies, University of Manchester, vol. 60(1), pages 53-63, March.
    • Handle: RePEc:bla:manch2:v:60:y:1992:i:1:p:53-63
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    Cited by:

    1. Fung, Michael Ka-Yiu & Zeng, Jinli, 1997. "Equity control of multinational firms in an economic growth model with urban unemployment," International Review of Economics & Finance, Elsevier, vol. 6(3), pages 287-301.
    2. Hamid Beladi & Shigemi Yabuuchi, 2010. "Equity Control of Multinational Firms: Effects on Resource Allocation and National Welfare," Review of Development Economics, Wiley Blackwell, vol. 14(1), pages 93-102, February.
    3. Yu, Eden S. H. & Chi-Chur, Chao, 1996. "Are wholly foreign-owned enterprises better than joint ventures?," Journal of International Economics, Elsevier, vol. 40(1-2), pages 225-237, February.
    4. Chao, Chi-Chur & Yu, Eden S.H., 2007. "Trade liberalization, foreign ownership, and the environment in a small open economy," International Review of Economics & Finance, Elsevier, vol. 16(4), pages 471-477.

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