International Trade and Finance: A North American Perspective

By Khosrow Fatemi | Go to book overview
Save to active project

(see Equation 14.5 in Table 14.2), at least in the short run. Per capita income does not seem to benefit as much from MNC local borrowing, except in the lowest- and highest-income groups in these countries (see Equation 14.4 in Table 14.2). In some of the groups it shows negative relationships, although none of these are significant. One explanation for this seemingly contradictory result (significant and positive relationship with GNP or lack of it, or with respect to per capita income) could be the differences in population growth rate and/or income distribution prevailing in the different income group countries. 7


SUMMARY AND CONCLUSION

This study investigated the consequences of the borrowing decisions of foreign direct investors in the local financial markets of developing host countries. The statistical results indicate that foreign direct investors do indeed borrow in the countries they operate in. However, this practice does not seem to adversely affect (that is, crowd out) local borrowers. Instead, the supply of credit seems to increase and accommodate all borrowers, public and private. Regarding the development momentum in these countries, foreign direct investors' local borrowing shows a positive, and in most cases significant relationship with gross national product in all income groups. It is government borrowing that shows a mixed result (both negative and positive) in its relationship with gross national income.


NOTES
1.
See, among others, Robert Z. Aliber, "A Theory of Direct Investment, The International Corporation," in A Symposium, edited by Charles P. Kindleberger ( Cambridge, MA: MIT Press, 1970), pp. 17-34; John H. Dunning, International Production and the Multinational Enterprise ( Boston: Allen & Unwin, 1981); M. Kraska, and Koji Tiara, "Foreign Capital, Aid, and Growth in Latin America," Developing Economies 12, no. 3 ( September 1974):214-18; R. Nurkse, Problem of Capital Formation in Underdeveloped Countries ( New York: Oxford University Press, 1953); and G. F. Papanek , "Aid, Foreign Private Investment, Savings, and Growth in Less Developed Countries," Journal of Political Economy 81, no. 1 ( January-February, 1973):120-30.
2.
K. B. Griffin, and J. L. Enos, "Foreign Assistance: Objectives and Consequences," Economic Development and Cultural Change 18 ( April 1971):313-27; United Nations, Multinational Corporations in World Development ( New York: Praeger, 1974); T. Weisskopf, "The Impact of Foreign Capital Inflow on Domestic Savings in Underdeveloped Countries," Journal of International Economics 2, no. 1 ( February 1972).
3.
Isaiah Frank, Foreign Enterprise in Developing Countries ( Baltimore, MD: Johns Hopkins University Press, 1980); Rajnish Mehra, "On the Financing and Investment Decisions of Multinational Firms in the Presence of Exchange Risk," Journal of Financial and Quantitative Analysis ( June 1978):29-47; G. L. Reuber, et al., Private Foreign Investment in Development ( London: Oxford University Press, 1973).

-196-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited page

Bookmark this page
International Trade and Finance: A North American Perspective
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen
/ 304

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?