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Investissement direct de l’étranger et effets de retombée: le gradualisme peut être préférable.
Author(s) -
Desmet Klaus,
Meza Felipe,
Rojas Juan A.
Publication year - 2008
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/j.1540-5982.2008.00491.x
Subject(s) - foreign direct investment , argument (complex analysis) , economics , gradualism , absorptive capacity , foreign capital , subsidy , monetary economics , stock (firearms) , investment (military) , capital (architecture) , foreign portfolio investment , market economy , international economics , macroeconomics , microeconomics , return on investment , open ended investment company , industrial organization , profit (economics) , law , history , chemistry , archaeology , engineering , biology , paleontology , biochemistry , political science , mechanical engineering , politics
. The standard argument says that in the presence of positive spillovers foreign direct investment should be promoted and subsidized. In contrast, this paper claims that the very existence of spillovers may require temporarily restricting FDI. Our argument is based on two features of spillovers: they are limited by the economy's absorptive capacity and they take time to materialize. By letting in capital more gradually, initial investment has the time to create spillovers – and upgrade the economy's absorptive capacity – before further investment occurs. The economy converges to a steady state with a superior technology and a greater capital stock.