Voluntary export restraints and foreign investment

Dei, Fumio

doi:10.1016/0022-1996(85)90038-8

Cited by 35 publications

(13 citation statements)

References 6 publications

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“…The long-run result con¢rms Dei's (1985a) original insight that, in a quota regime, foreign capital in£ows always improve welfare. 10 ã The Case of Tariffs…”

Section: â the Case Of Quotassupporting

confidence: 67%

Domestic Equity Controls of Multinational Enterprises

Chao

2000

The Manchester School

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We use a general equilibrium model to examine the welfare e¡ect of domestic equity requirements on multinational ¢rms in the presence of alternative types of trade instruments and varying degrees of the mobility of foreign capital. It turns out that, under quotas, raising equity requirements improves welfare in the short run but reduces welfare in the long run. In contrast, when tari¡s are in place, the policy of domestic equity requirements lowers welfare in the short run but raises welfare in the long run.

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“…The long-run result con¢rms Dei's (1985a) original insight that, in a quota regime, foreign capital in£ows always improve welfare. 10 ã The Case of Tariffs…”

Section: â the Case Of Quotassupporting

confidence: 67%

Domestic Equity Controls of Multinational Enterprises

Chao

2000

The Manchester School

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“…3 An important reason is that this form of VIE allows for greater flexibility in the case of economic growth. Let the market share of foreign goods under a 2 Analyses of VER with international capital movement have been provided by Dei (1985) and Neary (1988). 3 Qiu and Spencer (2002) identified three types of VIE -content VIE, market-share VIE and total value VIE.…”

Section: Features Of Viementioning

confidence: 99%

Voluntary Import Expansion and Direct Investment

Oda

Stapp

2007

Japanese Econ Rev

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This paper analyses the welfare effects of a market-share Voluntary Import Expansion (VIE) in the presence of foreign direct investment utilizing a duality approach. Introducing the cost burden of VIE explicitly, this paper considers the conditions under which a marketshare VIE is voluntary to the importing country. It is shown that the voluntary nature of VIE depends upon the capital import, cost burden and price difference effects and that a VIE is truly voluntary if it is accompanied by direct investment. We also show the existence of a complementary relationship between VIE and direct investment in attaining a particular level of welfare. JEL Classification Numbers: F13, F21.

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“…To see what brings about this difference in welfare effects of capital inflow under the two alternative protectionist regimes, one might recall that in Brecher and Diaz‐Alejandro (1977), capital inflow leads to an expansion of the domestically produced capital‐intensive goods sector via the usual Rybczynski effect thus leading to a crowding out of cheaper imports which constitutes the loss and manifests as a shrinkage in tariff revenue. The mechanism in Dei (1985) is quite different. The model is once again a competitive two‐sector general equilibrium model with the usual Heckscher–Ohlin–Samuelson (H–O–S) technologies.…”

Section: Introductionmentioning

confidence: 99%

“…This paper discusses the transition from free trade to import quotas with perfect capital mobility. Dei (1985) constructs a two‐sector competitive general equilibrium model to show that capital inflow is welfare improving for the host country when the VER‐protected import‐competing sector is capital‐intensive. This is quite interesting when seen against the standard results of immiserization arrived at by Brecher and Diaz‐Alejandro (1977) where capital inflow is allowed for in a model with tariff‐protected capital‐intensive sector.…”

Section: Introductionmentioning

confidence: 99%

“…Furthermore, to the extent that importables are capital‐intensive, this leads to a fall in the rental rate via the Stolper–Samuelson effect leading to a favourable factor terms of trade, thus bringing down the repatriation load. Dei (1985) serves as our point of departure. Once out of the competitive set‐up, robustness of this result becomes questionable.…”

Section: Introductionmentioning

confidence: 99%

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Capital Inflow Under Voluntary Export Restraint

Chakraborty

2008

Metroeconomica

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This paper investigates the welfare consequence of exogenous capital inflow for the host country when the source country implements 'voluntary export restraint'. In an imperfectly competitive market with an increasing returns to scale (IRS) sector, we show the possibility of welfare immiserization. Two channels are identified leading to immiserization. First, and this is direct, resource reallocation following capital inflow can squeeze the underproduced sector and reduce welfare. Second, contraction of the IRS sector can raise the return to capital, even when the price of the capital-intensive importable falls unambiguously. Thus, even with an improvement in commodity terms of trade, the factor terms of trade can worsen and reduce welfare.

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Voluntary export restraints and foreign investment

Cited by 35 publications

References 6 publications

Domestic Equity Controls of Multinational Enterprises

Domestic Equity Controls of Multinational Enterprises

Voluntary Import Expansion and Direct Investment

Capital Inflow Under Voluntary Export Restraint

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