Distributional Consequences of Direct Foreign Investment

Distributional Consequences of Direct Foreign Investment

1st Edition - January 28, 1978
This is the Latest Edition
  • Authors: Robert H. Frank, Richard T. Freeman
  • eBook ISBN: 9781483271538

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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

  • Preface

    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


Product details

  • No. of pages: 170
  • Language: English
  • Copyright: © Academic Press 1978
  • Published: January 28, 1978
  • Imprint: Academic Press
  • eBook ISBN: 9781483271538

About the Authors

Robert H. Frank

Richard T. Freeman

About the Editor

Karl Shell

Affiliations and Expertise

Cornell University