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Distributional Consequences of Direct Foreign Investment - 1st Edition - ISBN: 9780122650505, 9781483271538

Distributional Consequences of Direct Foreign Investment

1st Edition

Authors: Robert H. Frank Richard T. Freeman
Editor: Karl Shell
Hardcover ISBN: 9780122650505
Paperback ISBN: 9781483239019
eBook ISBN: 9781483271538
Imprint: Academic Press
Published Date: 28th January 1978
Page Count: 170
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Distributional Consequences of Direct Foreign Investment examines the net effect of direct foreign investment (DFI) on both U.S. employment demand in the short run and on the level and distribution of domestic income in the long run. Topics covered range from measurement of home-foreign substitution to the employment impact of DFI and the long-run distributional consequences of overseas investment. Short-run labor market adjustments to unemployment resulting from overseas production transfers are also discussed. Comprised of nine chapters, this volume begins with a survey of existing studies of the DFI phenomenon that critically evaluates the question of what firms would or could have done in the absence of a DFI alternative. The reader is then introduced to an alternative framework within which to estimate the degree of substitutability of home for foreign production. This framework consists of a microeconomic model of the multinational firm as it operates under two alternative policy regimes, one of which places no restrictions on the firm's activities and the second denies it the option of establishing a foreign production subsidiary. Input-output techniques, together with information on substitutability, are used to obtain estimates of the net employment impact of DFI. A probabilistic model of an industry labor market is also presented. In addition, the book analyzes the effect of technology transfer through licensing on the size and composition of domestic income. This monograph will be useful to practitioners who employ econometrics and mathematical economics.

Table of Contents


Chapter I Introduction

Chapter II Literature Survey

Survey Studies

Statistical Tabulations

The Product-Cycle Literature

Case Evaluations

Econometric Studies

Chapter III Measurement of Home-Foreign Substitution

Factors Affecting Home-Foreign Substitution

A Simple Model for Measuring Home-Foreign Substitution

Chapter IV Micro Model Extensions

Variable Unit Costs, Foreign Sales Only

Home Sales Included

Chapter V The Employment Impact of Direct Foreign Investment

The Basic Input-Output Calculation

Data Sources and Preparation

Calculation of Net Employment Effects

Chapter VI The Effect of DFI on the Occupational Composition of Domestic Employment Demand

Chapter VII Short-Run Labor Market Adjustments to Unemployment Resulting from Overseas Production Transfers

Chapter VIII The Long-Run Distributional Consequences of Overseas Investment

Direct Foreign Investment in a Long-Run Model

The Foreign Investment Model

The Long-Run Effects of Direct Foreign Investment

Distributional Effects on Savings in the DFI Model

Direct Technology Transfer in a Long-Run Model


Chapter IX Concluding Remarks

Appendix A Details on Calculation of σ Values

Appendix B Technical Proofs

Appendix C Tables

Appendix D The Industry Labor Market Model

Appendix E Sensitivity Tests



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© Academic Press 1978
28th January 1978
Academic Press
Hardcover ISBN:
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About the Authors

Robert H. Frank

Robert H. Frank

Richard T. Freeman

Richard T. Freeman

About the Editor

Karl Shell

Karl Shell

Affiliations and Expertise

Cornell University

Ratings and Reviews