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dc.contributor.authorAntras, Pol
dc.contributor.authorDesai, Mihir
dc.contributor.authorFoley, C. Fritz
dc.date.accessioned2009-07-27T18:51:24Z
dc.date.issued2009
dc.identifier.citationAntras, Pol, Mihir A. Desai, and C. Fritz Foley. 2009. Multinational firms, FDI flows and imperfect capital markets. Quarterly Journal of Economics 124(3): 1171-1219.en
dc.identifier.issn0033-5533en
dc.identifier.urihttp://nrs.harvard.edu/urn-3:HUL.InstRepos:3199065
dc.description.abstractThis paper examines how costly financial contracting and weak investor protection influence the cross-border operational, financing and investment decisions of firms. We develop a model in which product developers can play a useful role in monitoring the deployment of their technology abroad. The analysis demonstrates that when firms want to exploit technologies abroad, multinational firm (MNC) activity and foreign direct investment (FDI) flows arise endogenously when monitoring is nonverifiable and financial frictions exist. The mechanism generating MNC activity is not the risk of technological expropriation by local partners but the demands of external funders who require MNC participation to ensure value maximization by local entrepreneurs. The model demonstrates that weak investor protections limit the scale of multinational firm activity, increase the reliance on FDI flows and alter the decision to deploy technology through FDI as opposed to arm's length technology transfers. Several distinctive predictions for the impact of weak investor protection on MNC activity and FDI flows are tested and confirmed using firm-level data.en
dc.description.sponsorshipEconomicsen
dc.language.isoen_USen
dc.publisherMIT Pressen
dc.relation.isversionofdoi:10.1162/qjec.2009.124.3.1171en
dash.licenseOAP
dc.titleMultinational Firms, FDI Flows and Imperfect Capital Marketsen
dc.typeJournal Article
dc.description.versionAccepted Manuscript
dc.relation.journalQuarterly Journal of Economicsen
dash.depositing.authorAntras, Pol
dc.identifier.doi10.1162/qjec.2009.124.3.1171*
dash.contributor.affiliatedFoley, C
dash.contributor.affiliatedDesai, Mihir
dash.contributor.affiliatedAntras, Pol


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