Table 4 - uploaded by Georges Siotis
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Japanese Manufacturing Enterprises in Europe Classified by Industry (529 finns as of the end of January 1990) Industry Total
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This paper analyzes three policy issues associated with foreign direct investment flows in the European Community. First, we find that recent FDI flows raise concerns that the technology of EC firms might be sourced by foreign competitors. Second, we analyze appropriate institutions to settle international conflicts in the control of foreign direct...
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Context 1
... emerges (listed in order of impor- According to surveys of Japanese manufacturing tance): chemicals, other manufacturing, and ma- firms in Europe (JETRO), the largest number of chinery, with more than 20 per cent of stocks in firms 3 is found in electronic components and parts, 1989 4 (on a historical cost basis). Food, primary general machinery and equipment, chemicals, and metals, and transport equipment all have shares electronic and electrical machinery (see Table 4). between 5 and 10 per cent. ...
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Citations
... Incentives have also become increasingly important for national policymakers who are trying to promote local production, employment, and welfare. Considering that market integration has reached further at the regional rather than global level, it is also clear that the effects of incentives are likely to be particularly strong in the competition for FDI within regions (or even countries), when the initial investment decision has been taken and the investor is choosing between alternative locations in a given region (e.g., Coughlin et al. 1991;Grubert and Mutti 1991;Hines 1996;Neven and Siotis 1993;Swenson 1998). For instance, if a firm has two more or less similar location alternatives for its investment, incentives can tilt the investment decision. ...
... On one hand, it is hard to justify investment incentives focusing on foreign MNCs that do not differ fundamentally from local companies. On the other hand, Neven and Siotis (1993) provide arguments for investment subsidies in cases with imperfect labor markets, where the likelihood that unemployed workers find new jobs in the absence of FDI incentives is very low. ...
This book offers a strategic analysis of current and future perspectives of Foreign Direct Investment (FDI) inflows into the South East European media market. The author develops a hybrid FDI business model strategy to guide media companies wishing to more effectively position and leverage their media infrastructure within the increasingly globalized and expanding media market. By conducting sixteen comparative and exploratory case studies of the South East European media market, the author explores how specific microeconomic factors influence spillover effects, absorption capacities and investment incentives between local and foreign firms through FDI inflows. The book is directed towards researchers and students, as well as practitioners/professionals involved with media organizations.
... For instance, early studies found that Japanese firms are motivated by US locational advantages in technology, and establish joint ventures with their American partners to close the technological gap with their competitors in the host country. Neven and Siotis (1993) similarly found FDI in Europe to be concentrated mainly in innovative sectors. Examining total factor productivity of the US, Japan and 11 European countries for the period 1971-1990, Lichtenberg and Van Pottelsberghe (2001 found that both imports and OFDI contribute to productivity growth in these economies. ...
... This was originally specified simply in terms of revealed comparative advantage and openness (Maskus and Webster, 1995;Milner and Pentecost, 1996). However, this has subsequently been extended, building on the entry literature of Rosenbaum and Lamort (1992) and Shapiro and Khemani (1987) to incorporate host country entry conditions as determinants of inward investment (see, e.g., Driffield, 2001;Neven and Siotis, 1993). We therefore extend this model to include factors that are likely to influence FDI, such as a dominant set of indigenous inter-firm networks of keiretsu. ...
This paper examines an issue that has received considerable comment but little analysis. It has often been argued that the presence of the keiretsu in Japan has been instrumental in deterring multinational firms from entering Japan, though evidence for this is patchy. We present some new analysis of this issue, thereby evaluating the effects of keiretsu on inward investment penetration in Japan. In contrast to previous work in this area, our results suggest that there is little relationship between inward FDI and keiretsu networks, once one controls for endogeneity and unobservable heterogeneity. The results illustrate some important interaction effects between keiretsu and other explanatory variables that explain differences in inward investment penetration.
... Young (1988) andNeven and Siotis (1993) find an extremely significant effect of FDI on productivity, which they attribute to the specific characteristics of the target region. ...
The paper presents several results concerning the impact of foreign direct investments on labour productivity in different countries. The focus is on the labour productivity differences that exist between the foreign and domestic companies and on the way these differences evolve in the host country. Results show that national companies generally increase their labour productivity due to the technological and managerial competences that they borrow from the foreign companies established in their country and also because: firstly they have to protect themselves from the new competition and secondly they must comply with the growing demand coming from the new investors. Due to their higher labour productivity, foreign firms offer higher wages to their employees. This also determines a growth in the salaries of national companies’ skilled workers going to wage inequalities and skill differences. However, the overall effect of a growing productivity is most oftenly translated into job creation.
... Many other scholars have contested that in the 1990s most FDI is attracted by some economic fundamentals in the recipient country-market size, the level of real income, skill levels, trade policies, infrastructures etc (see the works of of Dunning, 1993;Globerman and Shapiro, 1999;Globerman, 2001 andBlomstrom andKokko, 2003). Newer theories suggest that at the beginning of the 21 st century, investment incentives are the most potent motivations for inward FDI in most recipient countries (see Neven and Siotis, 1993;UNCTAD, 1995, 1996and Blomstrom and Kokko, 2003. A number of studies have indicated that market size, natural resources and liberalisation policies have served to attract foreign investments to Nigeria despite political instability (see Dandi, 2009). ...
... Empirical investigation of the relationship between productivity growth in industrialized countries and foreign presence of their MNEs tends to support the view that FDI-related R&D spillovers contribute to the productivity growth of home countries. For example, Bracornier and Ekholm (2002) found a positive association in Sweden between the size of outward and inward FDI, R&D expenditure by the host country and technological spillovers absorbed by the home country; Neven and Siotis (1993) similarly found FDI in Europe to be concentrated mainly in innovative sectors. Examining total factor productivity of the US, Japan and 11 European countries for the period 1971-1990, Lichtenberg and Van Pottelsberghe (2001) found that both imports and ODI contribute to productivity growth in these economies. ...
There has been a marked growth in recent years in outward direct investment (ODI) by developing countries, and in particular, by China. Previous studies have examined the impact on developing countries productivity of foreign direct investment (FDI) from developed countries. This paper looks at the effects of China's outward direct investment on growth in its own productivity, and at two specific reasons for this growth: technology sourcing and improvements in efficiency. These are examined using data from China's ODI in eight developed countries during the period 1991 to 2007. It appears that Chinese outward direct investment has had beneficial spill-over effects in improving total factor productivity growth over the period of the study, and that gains in efficiency have been the chief reason for this. Our vector auto regression (VAR) decomposition analysis also suggests that domestic R&D capital stocks are the most important source of productivity growth with greater contribution to technological progress. China is likely to continue to expand its ODI and it will be interesting to see whether the productivity gains continue at the same rate, and whether other developing countries also increase their ODI and reap the same benefits.
... and Wooton, 1996). Market prices for capital, labour, or land can diverge from their shadow costs because of regulation or excess capacity in a cyclical downturn. For example, existing government interventions, such as employment insurance, mandatory minimum wages, or workplace regulations, can lead to an undervaluation of benefits from employment. Neven and Siotis (1993) refer to investment subsidies as a way of overcoming 'strong distortions' in the E.U. labour market. Barros and Cabral (2000) consider a situation where unemployment problems lead to a shadow wage below the nominal wage as an impetus for governments to subsidize FDI. Economic activities frequently generate spillovers that cannot all be ...
Recently, several governments in Canada have shown an increased willingness to subsidize private investment projects, especially in the manufacturing sector, to the dismay of tax conservatives. I evaluate under what circumstances these government subsidies make sense, paying particular attention to the efforts of the Ontario and federal governments to attract new investments in the automobile sector. I show what governments should expect to pay when they join a bidding war and derive the expected welfare gain. The analysis suggests that, in contrast with the public debate and many previous studies, it is not the absolute size of benefits that matters, but the relative private attractiveness for the investing firm and the relative size of externalities in each location.
... levels (Black and Hoyt, 1989). Alternatively, employment insurance or excessive workplace regulations can lead to an undervaluation of employment benefits. If the shadow wage—the opportunity cost of time—is below the nominal wage, economic activity attracted through investment subsidies can provides a net welfare benefit (Barros and Cabral, 2000). Neven and Siotis (1993) propose this mechanism as a way to overcome " strong distortions " in the E.U. labour market. This argument clearly has merit, but such distortions are ubiquitous. Detractors from discretionary incentive packages sensibly argue that it is more efficient to lower distortionary taxes or regulations uniformly rather than selectively for on ...
Recently, several governments in Canada have shown an increased willingness to subsidize private investment projects, especially in the manufacturing sector, to the dismay of tax conservatives. I evaluate under what circumstances these government subsidies make sense, paying particular attention to interjurisdictional competition. I show what governments should expect to pay when they join a bidding war and derive the expected welfare gain. The analysis looks in detail at the efforts of the Ontario and federal governments to attract new investments in the automobile sector.
... Nevertheless, in case (ii)(b) costs are still lower than in the hypothetical case without R&D.13 The service sector and the non-tradeable manufacturing sector comprise about two thirds of the economy in industrialized countries, and both FDI and R&D are becoming increasingly important in these industries(Neven and Siotis, 1993;Hackmann, 1997). For example, for banking and finance, business consulting, general merchandising and ...
... We have shown that relocation arises when there are no relocation costs, but by continuity, it also arises for small positive values of R.22 SeeGraham and Krugman (1989),Grossman and Helpman (1991),Neven and Siotis (1993),Caves (1996), Sanna-Randaccio (1996 andMarkusen and Venables (1997) for an ...
... SeeGraham and Krugman (1989),Neven and Siotis (1993) for a discussion. ...
We analyse a two-country model of Foreign Direct Investment (FDI) and R&Doffshoring. In the basic model, two firms, each of which is originally situated in only one of the two countries, first decide whether to build a plant abroad. Then,they decide whether to relocate R&D activities offshore. Finally, they engage in product-market competition. In this model, FDI liberalization causes a relocation of R&D activities if intrafirm communication is sufficiently well developed, external spillovers are substantial, competition is not too strong and foreign markets are not too small. Surprisingly, such a relocation of R&D activities usually nevertheless increases
domestic welfare.
... The reason is the following: FDI may increase multi-market contact, and thus make collusion easier to sustain (see Bernheim and Whinston (1990), and Neven and Siotis (1993) for a discussion in the context of FDI). Last, MNCs may be better placed to extract rents from host country governments, for instance by successfully lobbying for protection (Wang and Blomström (1982)). ...
A short review of the theoretical and empirical evidence indicates that foreign direct investment (FDI) has the potential to increase the intensity of competition as well as to act as a channel for technology transfers. One would expect, all else equal, an increase in average firm performance following a wave of FDI, as multinational corporations (MNCs) enjoy higher levels of efficiency and have the potential to generate positive spillovers. At the same time, the entry of foreign firms has also been associated with an increase in competitive pressure on the domestic market. Using a large firm level dataset covering all sectors of Spanish manufacturing during the period 1983-96, we disentangle these three effects by estimating a dynamic model of firm level performance, which we proxy by profitability. We find that FDI has a positive long-run effect on the profitability of target firms, but this is limited to firms belonging to R&D intensive sectors. In addition, the results indicate that foreign presence dampens margins. However, this effect appears to be more than compensated by positive spillovers in the case of knowledge intensive industries.
