U.C. Santa Cruz, Economics Department
401 Engineering 2 Building, 1156 High Street
Santa Cruz, CA 95064
NBER Working Papers and Publications
|August 2011||Foreign Firms and Local Communities|
with Bruce Blonigen: w17282
The literature on the effects of foreign direct investment (FDI) and activities of multinational enterprises (MNEs) on host-countries has been almost exclusively focused on issues of productivity, growth and wages. We argue that this leaves quite a bit of important unexplored areas of inquiry, particularly those connected with the interactions of local communities and governments with MNEs. As an example, we provide a novel analysis of local corporate philanthropy, which shows significant differences between local- and foreign-owned corporations. We find that foreign-owned enterprises are less likely to give, but that when they do give, it is substantially more in magnitude than domestic firms, everything else equal. This evidence is consistent with the hypothesis that foreign-owned fi...