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The role of firm ownership in policy competition for foreign direct investment between asymmetric countries

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  • Sanjo, Yasuo

Abstract

This study develops a two-country policy competition model for foreign direct investment between asymmetric countries. It analyzes how firm ownership via foreign capital affects the investment location choice of the foreign firm, and policy competition between the potential host countries. The findings show that the inflow of foreign capital changes the investment location choice of the foreign firm, as does policy competition between the host countries. Further, an increase in the inflow of foreign capital to a domestic firm in the host country heightens the country's attractiveness as an investment location.

Suggested Citation

  • Sanjo, Yasuo, 2015. "The role of firm ownership in policy competition for foreign direct investment between asymmetric countries," International Review of Economics & Finance, Elsevier, vol. 35(C), pages 110-121.
    • Handle: RePEc:eee:reveco:v:35:y:2015:i:c:p:110-121
    DOI: 10.1016/j.iref.2014.09.009
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    References listed on IDEAS

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    1. Pedro P. Barros & Luís Cabral, 2000. "Competing for Foreign Direct Investment," Review of International Economics, Wiley Blackwell, vol. 8(2), pages 360-371, May.
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    11. Ben Ferrett & Andreas Hoefele, 2015. "On the efficiency of fiscal competition for FDI when incumbent firms are foreign-owned," Economics Bulletin, AccessEcon, vol. 35(1), pages 694-701.
    12. Sanjo, Yasuo, 2013. "Country size and tax policy for international joint ventures in an integrated market," International Review of Economics & Finance, Elsevier, vol. 27(C), pages 37-53.
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    Cited by:

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    More about this item

    Keywords

    Foreign direct investment; Policy competition; Role of firm ownership; Location choice;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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