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The Economics of Foreign Direct Investment Incentives

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Foreign Direct Investment in the Real and Financial Sector of Industrial Countries

Abstract

The attitude towards inward foreign direct investment (FDI) has changed considerably over the last couple of decades, as most countries have liberalised their policies to attract investment from foreign multinational corporations (MNCs). On the expectation that foreign MNCs will raise employment, exports or tax revenue, or that some of the knowledge brought by the foreign companies may spill over to the host country’s domestic firms, governments across the world have lowered various entry barriers and opened up new sectors to foreign investment. An increasing number of host governments also provide various forms of investment incentives to encourage foreign-owned companies to invest in their jurisdiction.1 These include fiscal incentives such as tax holidays and lower taxes for foreign investors, financial incentives such as grants and preferential loans to MNCs, as well as measures such as market preferences, infrastructure and sometimes even monopoly rights.2

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Authors
  1. Magnus Blomström
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  2. Ari Kokko
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  3. Jean-Louis Mucchielli
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Editors and Affiliations

  1. Deutsche Bundesbank, Wilhelm-Epstein-Straße 14, 60431, Frankfurt am Main, Germany

    Heinz Herrmann

  2. New York Office, NBER, 365 Fifth Avenue, 5th Floor, 10016-4309, New York, NY, USA

    Robert Lipsey (Director) (Director)

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Blomström, M., Kokko, A., Mucchielli, JL. (2003). The Economics of Foreign Direct Investment Incentives. In: Herrmann, H., Lipsey, R. (eds) Foreign Direct Investment in the Real and Financial Sector of Industrial Countries. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-24736-4_3

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  • DOI: https://doi.org/10.1007/978-3-540-24736-4_3

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-53437-9

  • Online ISBN: 978-3-540-24736-4

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