Yuriy Gorodnichenko, Jan Svejnar, Saturday, September 26, 2015 - 00:00

While there is substantial evidence that multinationals are more productive than domestic firms, the evidence on productivity spillovers remains mixed. This column estimates the effects of foreign presence on the innovation of local firms. It suggests that spillovers from foreign firms to domestic firms are limited to domestic firms immediately connected to foreign firms. Requirements for foreign firms to have significant local content may therefore be justified.

Peng Xu, Monday, August 3, 2015 - 00:00

Corporate Japan is known for avoiding uncertainty. This is one of the reasons why changes of any kind are difficult – but not impossible – to realise. This column employs firm data to show that foreign direct investment has been changing corporate Japan by pursuing risk taking in private Japanese firms. This risk taking is positively related to firms’ sales growth and corporate earnings.

Sourafel Girma, Yundan Gong, Holger Görg, Sandra Lancheros, Christiane Krieger-Boden, Friday, July 24, 2015 - 00:00

In the run-up to WTO accession in 2001, China considerably liberalised its policy towards FDI. This column argues that foreign acquisitions contributed significantly to raising export activities and R&D activities, though rather through joint ventures than whole acquisitions.

David Atkin, Benjamin Faber, Marco Gonzalez-Navarro, Monday, June 8, 2015 - 00:00

Much attention has been paid to supermarkets descending on developing nations, not least because retail is traditionally a big employer. Presenting evidence from Mexico, this column argues that the debate about new foreign retail outlets should focus far more on how supermarkets can greatly reduce the cost of living for the vast majority of local households rather than restricting attention to potentially adverse effects on nominal incomes within the retail sector.

Nicolas Magud, Sebastián Sosa, Wednesday, May 13, 2015 - 00:00

Emerging markets are not the hot investment prospect they used to be. This column estimates that weaker private investment in these nations is a slowdown after a period of boom rather than an outright slump. Prospects for a recovery of business investment, however, are not promising. Commodity prices are expected to remain weak and external financial conditions are set to become tighter. 

Joshua Aizenman, Yothin Jinjarak, Huanhuan Zheng, Monday, May 4, 2015 - 00:00

China’s export-led growth has coincided with the country becoming one of the largest net global creditors. This column looks ahead to the next chapter of Chinese ‘outwards mercantilism’ – FDI investment in natural resources, commodities and mining bundled with access to finance and the export of Chinese capital products and labour services.

Theodore H. Moran, Friday, January 30, 2015 - 00:00

Ron Alquist, Rahul Mukherjee, Linda Tesar, Monday, December 22, 2014 - 00:00

Kozo Kiyota, Thursday, November 27, 2014 - 00:00

Hiau Looi Kee, Friday, November 21, 2014 - 00:00

Heiwai Tang, Wenjie Chen, Monday, September 22, 2014 - 00:00

Eric Neumayer, Peter Nunnenkamp, Martin Roy, Friday, August 1, 2014 - 00:00

Hoping to attract more FDI, developing countries are increasingly entering stricter investment agreements. But there is no conclusive evidence that such agreements serve them well. This column argues that contagion may help explain this trend. Competition between developing countries for FDI from developed ones could drive the diffusion of international investment agreements.

Bernhard Dachs, Georg Zahradnik, Sunday, July 6, 2014 - 00:00

The Global Crisis brought a halt to three decades of R&D internationalisation, in which foreign firms’ share of total R&D expenditure had increased in almost all countries where data is available. However, this column argues that the crisis did not lead to a new global distribution of overseas R&D expenditure, despite the erosion of the EU’s share. The persistence of R&D expenditure is attributed to the costs of relocating R&D and to the autonomy of foreign subsidiaries.

Theodore H. Moran, Lindsay Oldenski, Tuesday, March 4, 2014 - 00:00

The US has once again ranked among the top two recipient countries for foreign direct investment. This column examines the effects of these large FDI inflows on the US domestic economy. Foreign multinationals are – alongside US-headquartered American multinationals – the most productive and highest-paying segment of the US economy. In addition, they provide positive spillovers to US firms. About 12% of the total productivity growth in the US from 1987 to 2007 can be attributed to productivity spillovers from inward FDI.

Holger Görg, Christiane Krieger-Boden, Adnan Seric, Tuesday, December 10, 2013 - 00:00

An expansion in the scope of foreign direct investment in sub-Saharan Africa promises to promote development in one of the poorest regions of the world. This column investigates the extent to which working with foreign multinationals enhances the capabilities of African firms. Acting as a supplier to a multinational enterprise improves a firm’s labour productivity, product and process innovation, while buying from a multinational improves only labour productivity. Governments should take advantage of these spillovers by promoting trade.

Ayumu Tanaka, Wednesday, November 20, 2013 - 00:00

Policymakers fear the negative employment effects of foreign direct investment. This column provides recent empirical evidence on FDI and domestic employment. The results show that FDI has positive effects on domestic employment. Furthermore, our new empirical research finds a non-negative relationship between Japanese firms' foreign activities and their suppliers' domestic employment.

Thomas Holmes, Ellen McGrattan, Edward C. Prescott, Friday, November 8, 2013 - 00:00

Why are FDI flows between China and technologically-advanced countries surprisingly small? This column analyses the issue in light of China's quid pro quo policy that makes technology transfer a precondition of foreign firms selling in China. We find that the policy provides significant gains for China, but losses to its FDI partners.

Dennis Reinhardt, Salvatore Dell'Erba, Monday, July 8, 2013 - 00:00

FDI flows tend to come in waves and concentrate in certain sectors. This column examines episodes of large gross foreign direct investment inflows - surges – at the sectoral level in emerging markets. It suggests that surges in the financial sector are associated with boom-bust cycles in domestic GDP and with expansions of credit in foreign currency. Moreover, restrictions on other forms of capital inflows tend to increase the likelihood of surges in financial-sector FDI.

Sebnem Kalemli-Ozcan, Christian Fons-Rosen, Bent E. Sørensen, Carolina Villegas-Sanchez, Vadym Volosovych, Tuesday, June 4, 2013 - 00:00

During the decades of globalisation, flows of foreign direct investment have surged in parallel with extensive policy momentum. This column examines whether the net aggregate gain from FDI is positive using a large panel of firms from 30 European countries. It turns out that even very large increases in FDI are not important for country-level productivity growth.

Victor Duggan, Sjamsu Rahardja, Gonzalo Varela, Wednesday, May 22, 2013 - 00:00

The ‘manufacturing matters’ movement has gained prominence on the policy agenda even as the nature of manufacturing continues to morph. This column discusses new research showing that opening service sectors to competition and foreign direct investment can be a powerful conduit for productivity gains in manufacturing. The gains depend on both the types of reforms and the specific services sectors in which these are implemented.


CEPR Policy Research