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Please use this identifier to cite or link to this item:
http://hdl.handle.net/1783.1/1821
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| Title: | Export, foreign direct investment and local content requirement |
| Authors: | Qiu, Larry Dongxiao
Tao, Zhigang |
| Keywords: | Export
FDI
Local content requirement
Tariff
Multinationals |
| Issue Date: | Jun-1999 |
| Series/Report no.: | Working Papers ; 9910 |
| Abstract: | Local content requirement (LCR) is a popular government regulation on foreign direct investment (FDI). This paper investigates the design of optimal LCR policy. LCR affects multinationals' international strategies, namely FDI and export. We find that a less efficient or more vertically integrated firm is more likely to adopt the FDI strategy over the export strategy. By taking the endogeneity of a firm's international strategy into account, we characterize conditions under which the host government's optimal LCR policy results in one of the following equilibria: (i) all firms make FDI, (ii) all firms choose export, and (iii) some make FDI and others choose export. |
| URI: | http://hdl.handle.net/1783.1/1821 |
| Appears in Collections: | CED Working Papers
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Files in This Item:
| File |
Description |
Size | Format |
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| lcr.pdf | | 269Kb | Adobe PDF | View/Open |
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