NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Gains from FDI Inflows with Incomplete Information

Assaf Razin, Efraim Sadka

NBER Working Paper No. 9008
Issued in June 2002
NBER Program(s):   IFM

The paper develops an international macroeconomic model of FDI flows with a unique feature: a hands-on management ability to react in real time to changing economic environments. Anticipating this advantage, foreign direct investors can outbid other investors in a certain industry in which they specialize in the source country. The model can explain both two-way FDI flows among developed countries and one-way FDI flows from developed to developing country. The unique gains from FDI to the host country stem from the increased eciency of domestic investment.

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Published: Razin, Assaf & Sadka, Efraim, 2003. "Gains from FDI inflows with incomplete information," Economics Letters, Elsevier, vol. 78(1), pages 71-77, January.

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