Found 33 article(s) for author 'Laura Alfaro'

Does Foreign Direct Investment Promote Growth? Exploring the Role of Financial Markets on Linkages

Does Foreign Direct Investment Promote Growth? Exploring the Role of Financial Markets on Linkages. Laura Alfaro, March 2010, Paper. “Do multinational companies generate positive externalities for the host country? The evidence so far is mixed varying from beneficial to detrimental effects of FDI on growth, with many studies that find no effect. In order to provide an explanation for this empirical ambiguity, we formalize a mechanism that emphasizes the role of local financial markets in enabling foreign direct investment (FDI) to promote growth through backward linkages. Using realistic parameter values, we quantify the…” Link

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Trade Policy and Firm Boundaries

Trade Policy and Firm Boundaries. Laura Alfaro, January 2010, Paper. “We study how trade policy affects firms’ ownership structures. We first embed a model of vertical integration decisions into a standard perfectly-competitive international trade framework. In the model, integration decisions are driven by a trade-off between the pecuniary benefits of coordinating production decisions and the managers’ private benefits of operating in preferred waysThe price of output is a crucial determinant of this choice, since it affects the size of the pecuniary benefits: higher prices lead to more integration. Through its effect on product prices, trade policy…” Link

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Why Doesn’t Capital Flow from Rich to Poor Countries? An Empirical Investigation

Why Doesn’t Capital Flow from Rich to Poor Countries? An Empirical Investigation. Laura Alfaro, May 2008, Paper. “We examine the empirical role of different explanations for the lack of flows of capital from rich to poor countries—the ‘Lucas Paradox.’ The theoretical explanations include cross country differences in fundamentals that affect productivity and capital market imperfections. We show that during 1970−2000 low institutional quality is the leading explanation. Improving Peru’s institutional quality to Australia’s level implies a quadrupling of foreign investmentRecent studies emphasize the role of…” Link

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