POLI 354 Lecture Notes - Lecture 15: Foreign Direct Investment, Pwn, Oast House
13 May 2018
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POLI%358%Lecture%15:%Foreign%Direct%Investment%and%Cooperation%%
13th%March%2018%%
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Table%of%Contents%
! "#$%#&$'()*(+,-(./0(1234%
o Why$MNCs$have$an$interest$in$pushing$for$preferential$liberalization-$global$value$
chains,$offshoring%
o Volume$of$FDI$is$sometimes$larger$than$the$volume$of$trade$%
o 70-80%$of$trade$is$now$by$MNCs%
! 5)6$()*(0)7$48&9(&/48&8:8&)/4(%
o which$policies$and$institutions$can$developing$countries$build$to$attract$FDI%
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FDI:%Definition%
! 123;<($/8$%=%&4$4(8>.8(9)/8%)6(.44$84(&/(8')()%(7)%$(9):/8%&$4%
! +,-<(&/#$487$/8(7.0$(8)(.9?:&%$(.(6.48&/@(&/8$%$48(&/($/8$%=%&4$4()=$%.8&/@():84&0$(8>$(
$9)/)7A()*(8>$(&/#$48)%%
o B3)/8%)6C(./0(B6.48&/@(&/8$%$48C!(DEF()'/$%4>&=%
o Different$from$capital$speculation-$only$care$about$interest$rates$and$fiscal$
condition%
o Long$term-$more$of$an$effect$on$socioeconomic$condition$%
o Control-$10%$ownership$–$set$by$the$IMF.$Makes$sense$for$many$MNCs-$have$
shareholders%
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FDI%and%cooperation%%
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o ;8.8$4(@$8(9.=&8.6M(G))48(8>$&%(=%)0:98&#&8A(./0(&/9%$.4$($7=6)A7$/8(%
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Stylized%facts%
! +,-(>.#$(@%)'/(0%.7.8&9.66A()#$%(8>$(=.48(8>%$$(0$9.0$4%
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The%rise%of%FDI%
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,%.7.8&9.66A(
&/9%$.4$0(&/(8>$().48(
N(0$9.0$4M(O,34(.64)(
>.#$(+,-(/)'(
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The%rise%of%developing%countries%outward%FDI%
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State-owned%MNCs%(2010)%
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Except$in$the$US,$most$MNCs$are$pwned$by$the$
state$
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Stylized%facts%
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! 1234(>.%$(8>$(7)48(=%)0:98&#$(*&%74(&/(8>$(&/8$%/.8&)/.6($9)/)7&9(4A48$7(%
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Firm%productivity%
! MNCs$are$the$most$productive$firms$in$the$
international$system$
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Document Summary
Poli 358 lecture 15: foreign direct investment and cooperation. Overview of fdi and mncs: why mncs have an interest in pushing for preferential liberalization- global value chains, offshoring, volume of fdi is sometimes larger than the volume of trade, 70-80% of trade is now by mncs. Role of domestic institutions: which policies and institutions can developing countries build to attract fdi. Mncs: enterprises that control assets in two or more countries. Fdi: investment made to acquire a lasting interest in enterprises operating outside the economy of the investor. Control" and lasting interest"- 10% ownership: different from capital speculation- only care about interest rates and fiscal condition, long term- more of an effect on socioeconomic condition, control- 10% ownership set by the imf. Fdi are a form of cooperation between non-state actors (mncs) and states. Which forms of cooperation: mncs jump tariffs, cut transportation costs, and get cheal abour and natural resources, states get capital, boost their productivity and increase employment.
