Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81150
Authors: 
Oxelheim, Lars
Ghauri, Pervez
Year of Publication: 
2008
Series/Report no.: 
IFN Working Paper 745
Abstract: 
In this paper it is argued that the restructuring following the stiffer competition stemming from increased global integration will trigger a race between countries to attract inward foreign direct investment (FDI). It is further argued that this race consists of last minute efforts and tailor-made packages designed by governments and their agencies to temporarily improve their country’s otherwise inferior profile. This race is non-transparent and the factors used to compete for inward FDI (the 'elements' of the race) deviate from those of long-term efforts to develop a favourable investment climate and improve productivity, as well as medium-term efforts, such as lowering corporate taxes. The paper elaborates on the research problem of properly understanding the drivers of inward FDI in the absence of data on the elements of the non-transparent race. It also addresses the economic policy problem following from this race with a scenario where a large share of global FDI ends up in China, putting the cohesion of the EU at stake and triggering a regional race within China.
Subjects: 
Inward FDI
China
European Union
Investment-diverting Policies
JEL: 
E61
F15
F21
F23
F36
F42
G18
G34
Document Type: 
Working Paper

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