The present paper, restricting its attention to the empirical economics literature, attempts to gauge current thinking on the question of whether FDI causes economic growth. Since technological spillovers are a key determinant of long run economic growth, the survey begins with the firm level evidence on technological spillovers of FDI on domestic firms. The macro FDI and growth literature is covered next. Finally, we examine the effect of FDI on income inequality and/or employment, skills, or jobs. In many contexts policies that exacerbate income inequality come under special scrutiny even if they are welfare enhancing. Our major finding is that FDI is generally associated with positive technological spillovers, economic growth, and increasing income inequality. For all three of these results, however, there are significant counter examples in the literature which must be respected.

This paper investigates determinants of intraindustry trade between the United States and twenty-two industrial nations. Included here are country-level characteristics suggested by modern models of monopolistic competition and trade and industry-level variables relating to imperfect competition, scale economies, and product differentiation. Country-level determinants of intraindustry trade include relative factor endowment differences, relative country size differences, distance, trade orientation, and the trade balance. Measures of factor intensity, scale economies, market structure, and product differentiation are included as country-level variables. Findings generally support predictions of modern trade theories. [F1]

This paper investigates country and industry-level determinants of vertical specialization-based trade. Industries that engage in this pattern of trade are identified through their use of offshore assembly provisions in the US tariff code. Findings explain why industries engage in vertical specialization-based trade and shed light on factors that enter production location decisions. Identifying factors that encourage vertical specialization-based production and trade will enhance our understanding of industry strategy and how trade patterns will evolve as the process of globalization continues. Results suggest vertical specialization-based trade will continue to grow relative to total trade.Vertical specialization, production sharing, offshore assembly provisions,

A significant research effort has been directed at establishing the determinants of foreign direct investment (FDI), with taxation policy identified as an important factor. However, the empirical literature has been limited in several respects, with most work focused exclusively on host country tax regimes. This paper seeks to extend the boundaries of FDI empirical inquiry by using a panel of nine investing tax exemption and tax credit countries over the period 1982-2000, constituting more than 85% of total US FDI inflows, and incorporating home country tax rates to analyse two as yet unanswered questions. First, are corporate income tax rates an important determinant of FDI in the US? Secondly, do investors from tax credit countries differ significantly in their tax response relative to those from tax exemption countries?

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