I denna uppsats undersöker vi Export Processing Zones (EPZ) roll i ett lands ekonomiska utveckling, exemplifierat med Mexico. Fokus för uppsatsen är centrerat kring de bakåtriktade länkeffekter som förväntas uppstå som en effekt av ett EPZ-program. Fenomenet längs den mexikansk-amerikanska gränsen kan sägas ha flera orsaker, men grundas i tillgången på billig arbetskraft samt närhet till världens enskilt största konsumentmarknad. Uppsatsen visar på ett minskat FDI-inflöde, ökad sysselsättning, begränsad teknologiöverföring samt mest jobbspecifik kunskapsöverföring. Eftersom få lokala eller inhemska underleverantörer kontrakteras av EPZ-företagen minimeras länkbildningen. De flesta ekonomiska vinster av zonen noteras i form av fler arbetstillfällen. Resultaten visar att även fast Mexico förlorat sina komparativa fördelar inom arbetsintensiv tillverkning i jämförelse med andra länder har man inte lyckats få ett motsvarande skift mot en mer kapitalintensiv produktion. Detta kan till stor del sägas bero på hur staten har hanterat zonen, bland annat med avseende på utländskt ägande.

This thesis analyses what effects foreign direct investments (FDI) has on a firm’s gross profit, wages and labour productivity. Focus is on the Swedish industrial goods and service sector which has shown on a rapid growth of offshore production. We use a theoretical framework with FDI and productivity theories. As a result of cost efficient alternatives to domestic production, a firm’s productivity should fall in the case of increased foreign production. Although, the increase in gross profit should rule out the negative affect that a decrease in productivity cause. There is a positive relationship between offshore production and gross profits, and expanded foreign production leads to a decreased wage rate. However, increased foreign employment showed a boost the labour productivity, which is wrong from a theoretical point of view. / I den här uppsatsen analyseras hur utländska direktinvesteringar påverkar företags vinster, löner och arbetsproduktivitet. Fokus är ställt på svenska företag inom sektorn industriella varor och tjänster. Den teoretiska delen tar upp utländska direktinvesteringar och arbetsproduktivitet. Som ett resultat av kostnadseffektiva alternativ utomlands, borde arbetsproduktiviteten falla om den utländska produktionen ökar. Den väntade vinstökningen efter utlandslokalisering borde dock ge en generell positiv effekt. Den empiriska delen visar ett positivt samband mellan utlandslokalisering och vinst. Bevis finnes också för att medellönen sjunker när utlandslokaliseringen ökar. Empiriska resultat visar också att ökad utlandslokalisering ökar arbetsproduktiviteten, vilket ur teoretisk ståndpunkt inte stämmer.

This thesis consists of four individual essays and an introductory chapter. While independent from each other, these essays share some common properties. They are all empirical and focus on the interaction between inflows of foreign direct investment (FDI) and host country characteristics. The primary focus of the thesis lies in how inflows of FDI affect developing and transition economies. Macro-level data are used in all essays. The first essay analyses the FDI inflows that the transition economies of Eastern Europe have attracted and tries to find determinants of these inflows. The following two essays compare the effect of FDI between developing and developed economies. The second essay studies the relationship between corruption in the host country and the volume of FDI inflows. The third essay explores the effect of FDI inflows on host country economic growth. The fourth and final essay analyses the relationship between FDI and trade, focusing on the link between FDI flows and host country exports in eight East Asian economies.

Why China emphasize on the development of electronics industry? Does it work? This paper analyzes the FDI policy of China¡¦s strategic industry, especially electronics industry. To maintain high economic growth, China treats electronics industry as strategic industry to upgrade other industries by its information and communication technology. Electronics industry, however, is weak on key technologies and components itself, not to mention technology upgrading. The result of this research is helpful on understanding the advantages and disadvantages China brings to foreign-invested companies in the near future. Besides, the result can be used as a China investment manual.

The link between foreign direct investments (FDI) and trade is firmly established in economic literature. Yet despite the vast amount of literature on this subject, very few have tried to look at FDI through the lens of trade theory, choosing rather to approach the subject on either a macroeconomic-level or on firm-level. The purpose and scope of this paper is to explore FDI through the lens of trade-theory. The central questions in this thesis are whether the gravity model of trade can serve as a reliable model for FDI value as well? Are there certain variables in the gravity model that are distinctively powerful determinants of FDI? Two econometric models are used to determine the gravitational impact on FDI, one ordinary OLS model and one fixed-effect model. The findings when using OLS regressions are that the components of the gravity model of trade are indeed key determinants of FDI value, and the two most significant positive determinants were home country GDP as well as home country per-capita GDP. In the fixed-effect model however, several variables were found to have no significant effect on FDI value and only home country GDP and host country per-capita GDP were consistent positive determinants of FDI.

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As discussed in the factor-price equalization theorem, prices, and thus wages, tend to equalize as a result of trade between two countries. The focus of this thesis is to perform a time series regression in order to evaluate whether wage convergence has taken place between Mexico and the United Sates of America due to the establishment of the North America Free Trade Agreement (NAFTA) in 1994. The authors of this thesis conclude that wage convergence did take place between the two countries in question, since the slopes found using the regression are mostly positive, indicating an increasing real wage ratio between Mexico and the United States of America.

<p>This dissertation consists of two essays in international macroeconomics. In the first essay I explore the role of portfolio diversification in explaining the distribution of foreign investment across countries. I do so by adopting a portfolio allocation approach to risk, that is widely used in empirical finance, to complement more traditional analyses of foreign capital flows across countries. I capture the portfolio diversification motive by a measure of country-specific riskiness, "covariance risk", which I construct as how countries' growth rates covary with the stochastic discount factor of a representative international investor. The idea is to capture the extent to which investments in a foreign economy provide a hedge against the investor's overall risk. My key new empirical finding is a strong and significant correlation between this new measure of country riskiness and foreign investment allocations. Less risky countries, i.e countries whose growth rates are more highly correlated with the investor's stochastic discount factor, receive larger investment shares than more risky countries. I interpret this result as evidence that investors do take into account diversification opportunities not only for portfolio investment decisions but also for foreign direct investment decisions. My empirical results confirm the theoretical predictions of standard portfolio allocation models.</p><p>In the second essay I explore the business cycle regularities of low-income countries in comparison to those observed in middle- and high-income countries. The data reveals several distinguishing features of the business cycle in low-income countries compared to the other two income groups: acyclical trade balances; highest volatility of consumption relative to output; highest volatility of debt; highest average debt-to-output ratio and lowest average savings ratio; significant negative correlation between domestic saving rates and the net foreign asset position. My main finding is that a small open economy model with both trend and transitory shocks to productivity, and varying intertemporal elasticity of substitution, motivated by subsistence consumption theories, can be used to account for the distinguishing features of the three income groups. The theoretical model shows that while both permanent shocks and transitory fluctuations around the trend are important sources of fluctuations in low-income countries, temporary shocks play a predominant role. In comparison to the other two income groups the volatility of the temporary shock for the low-income countries is more than three times higher than that for the high-income group and twice as large as that for the middle-income group. The same pattern holds for the permanent shock.</p> / Dissertation

This paper employs an augmented gravity model for a sample of 96 host countries to examine the impact of host country rule of law on direct investment from the United States. This paper further investigates the gap between property rights and freedom from corruption, the two primary components of a country’s rule of law. Property rights and freedom from corruption are both shown to have a significant positive effect on U.S. outward foreign direct investment. This thesis argues that freedom from corruption is a more powerful measure than property rights for determining the location of U.S. direct investment. This suggests that for host countries, reducing the level of corruption may be more effective at stimulating direct capital investment from U.S. investors than expanding property rights.

Chile and Colombia are two prosperous economies among the main FDI recipients in Latin America. Both countries underwent structural reforms that favored the entrance of transnational corporations and liberalized the economies. Considering that FDI flows have been largely resource-seeking and market-seeking it seems that the main driver of FDI in these two countries, besides their resource endowment, is economic growth. The document explores the hypothesis of growth-driven FDI carrying out cointegration and Granger causality tests at aggregate and sector levels. After the introduction, Chapters 2 and 3 present the evolution of world FDI flows and a literature review. Chapters 4 and 5 discuss the policy framework in Latin America and the evolution of FDI in Chile and Colombia. Finally, Chapter 6 presents the estimations and Chapter 7 the conclusions. The findings of the analysis suggest a long-term relationship between FDI and growth and validate the hypothesis of growth-driven FDI at the macroeconomic level. However, at the sector level the existence of a long run cause-effect relationship cannot be established in most of the cases. Regarding the direction of Granger causality at this level results are heterogeneous across sectors. The main conclusion of the thesis is that economic growth does Granger cause FDI at the aggregate level, but at the sector level the causal linkage seems not to be direct. (author's abstract)