Anderson, James, Larch, “Trade and investment in the global economy“, VoxEU CEPR Policy Portal, July
Foreign direct investment has traditionally been viewed as a key driver of prosperity, and modern FDI has also become a vehicle for transferring intangible assets. This column uses a counterfactual experiment based on a hypothetical world with no outward or inward FDI to and from low-income and lower-middle-income countries to examine the effects of FDI on trade, domestic investment, and welfare. World welfare falls by about 6% and all countries lose out, with some poorer countries losing over 50%. World trade falls by 7%, with the losses again unevenly distributed.
Relevant Posts
- Buti, Marco, (2019), “Trade shocks, growth, and resilience: Eastern Europe’s adjustment tale“, Vox CEPR Policy, June
- Barry Eichengreen, (2019), “The Return of Fiscal Policy”, Project Syndicate, 13 May
- Debora Revoltella, Philipp-Bastian Brutscher and Patricia Wruuck, (2019), “An EU tax credit to preserve incentives for investment in human capital in the context of intra-EU migration”, VoxEU, 5 April