Foreign Direct Investment in State Owned Enterprises

Abstract

We analyze determinants of foreign direct investment (FDI) in non-competitive industries. We develop a micro-level FDI determination model that allows for nonzero mark-up, and estimate it using the administrative FDI recipient records and annual financial statement data for Korean state owned enterprises (SOE). Using SOEs as our research objects can rule out the endogeneities of mark-up, firm ownership structure and the associated vertical or horizontal incentive FDI. This yields a consistent estimation of the effect of mark-up and other productivity-related factors on FDI. From the empirical analysis, we find that FDI is more likely to flow into firms with large-scale physical capital and output, and a positive mark-up, and the effect is the inverse of the number of workers in the firms, which implies that FDI might not cause productivity spillover effect in non-competitive industries.

Making Sense Out of U.S. Trade Policy or High-Stakes Poker Game?

“…• "Import policies (e.g., tariffs and other import charges, quantitative restrictions, import licensing, customs barriers, and other market access barriers) (Bacchetta & Bora, 2007;Noonan, 2008;Pyne & Roy, 2018); • Sanitary and phytosanitary measures and technical barriers to trade (Murina & Nicita, 2015;Kang, 2017); • Government procurement (e.g., "buy national" policies (Larch & Lechthaler, 2015) and closed bidding) (Hufbauer & Moran, 2015); • Export subsidies (e.g., export financing on preferential terms and agricultural export subsidies that displace U.S. exports in third country markets) (Brown & Troutt, 2018); • Lack of intellectual property protection (e.g., inadequate patent, copyright, and trademark regimes and enforcement of intellectual property rights) (Flynn, 2010;Helfer, 2010;Hunter & Lozada, 2010;Bruns, 2017); • Services barriers (e.g., limits on the range of financial services offered by foreign financial institutions, restrictions on the use of foreign data processing, and barriers to the provision of services by foreign professionals) (Hoekman, 2017); • Investment barriers (e.g., limitations on foreign equity participation and on access to foreign government-funded research and development programs, local content requirements, technology transfer requirements and export performance requirements, and restrictions on repatriation of earnings (so-called "blocked currencies" (Stanley, 1990)), capital, fees and royalties) (Smyth, Kerr, & Phillips, 2017); • Government-tolerated anticompetitive conduct of state-owned enterprises (Joo, Shim, & Sul, 2017) or private firms that restricts the sale or purchase of U.S. goods or services in the foreign country's markets; • Digital trade barriers (e.g., restrictions and other discriminatory practices affecting cross-border data flows, digital products, Internet-enabled services, and other restrictive technology requirements) (Selby, 2017;Malopulos, 2018); and, • Other barriers (barriers that encompass more than one category, e.g., bribery and corruption, or that affect a single sector)" (Hunter, Mest, & Shannon, 2911;Hunter & Mest, 2015).…”

The Influence Mechanism and Effect of Foreign Capital Entering to the Changes of China's Industrial Sectors Price

“…In 2018, the market share of foreign-invested enterprises in the market of these two industries were as high as 54.67% and 45.80% respectively, while the market share of foreign-invested enterprises in another seven industrial sectors also exceeded the warning line (30%) with respect to market control in ordinary industries, and the total number of industries where the warning line had been exceeded amounted to nearly 1/4. In recent years, many scholars also attributed the phenomenon of "price manipulation" and "mutually negotiated price" frequently reported in the media to the control of foreign companies in the industry [4][5][6][7][8][9][10]. However, there are also some scholars who held the opposite view that the expansion of market share of the industry occupied by foreign-invested enterprises should not be simply equivalent to foreign monopoly [11][12][13].…”