TY  - JOUR
AU  - Markusen,James R.
AU  - Venables,Anthony J.
TI  - Foreign Direct Investment as a Catalyst for Industrial Development
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6241
PY  - 1997
Y2  - October 1997
UR  - http://www.nber.org/papers/w6241
L1  - http://www.nber.org/papers/w6241.pdf
N1  - Author contact info:
James R. Markusen
Department of Economics
University of Colorado
Boulder, CO 80309-0256
Tel: 303/492-0748
Fax: 303/492-8960
E-Mail: james.markusen@colorado.edu

Anthony Venables
Department of Economics
University of Oxford
Manor Road Building
Manor Road
Oxford OX1 3UQ, United Kingdom
and CEPR
E-Mail: tony.venables@economics.ox.ac.uk
AB  - How does an FDI project affect local firms in the same industry? Competition in the" product and factor markets tends to reduce profits of local firms, but linkage effects to supplier" industries may reduce input costs and raise profits.  This paper develops an analytical framework" to assess these effects.  Circumstances in which FDI is complementary to local industry are" established, and it is shown how FDI may lead to the establishment of local industrial sectors. " These sectors may grow to the point where local production overtakes and forces out FDI plants. " Our results are consistent with the experience of a number of industrial sectors in the NICs."
ER  -