Foreign Direct Investment, Competition and Industrial Development in the Host Country
Abstract
This paper analyses the impact of foreign direct investment (FDI) on the development of local firms. We focus on two likely of FDI: a competition effect which deters entry of domestic firms and positive market externalities which foster the development of local industry. Using a simple theoretical model to illustrate how these forces work we show that the number of domestic firms follows a u-shaped curve, where the competition effect first...
Paper Details
Title
Foreign Direct Investment, Competition and Industrial Development in the Host Country
Published Date
Jan 1, 2004
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