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Equity Control of Multinational Firms: Effects on Resource Allocation and National Welfare
Author(s) -
Beladi Hamid,
Yabuuchi Shigemi
Publication year - 2010
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/j.1467-9361.2009.00541.x
Subject(s) - multinational corporation , economics , welfare , tariff , foreign direct investment , renting , unemployment , equity (law) , labour economics , investment (military) , international economics , market economy , economic growth , macroeconomics , finance , politics , political science , law
In this paper, we re‐examine the effects of equity control of multinational firms on resource allocation and national welfare in a model with rural–urban migration and urban unemployment. A large number of recipient (host) countries are developing countries with dual economies. We indicate, among other things, that a restriction on multinational investment may lower the unemployment rate and increase the total employment in the host country. Furthermore, we find that the restriction on multinational investment raises the national welfare in the host economy if the tariff imposed on imports is sufficiently large and the difference between domestic and foreign capital rental is sufficiently small.