FDI policies under shared factor markets Academic Article uri icon


  • We examine the consequences of foreign direct investment (FDI) policies in a general equilibrium setting with several oligopolistic industries. By shifting labor demand across countries, FDI raises the wage in the host country and lowers the wage in the source country, thereby raising profits of source country firms at the expense of host country firms. The extent of cross-ownership of firms, the relative number of firms and the relative supply of skilled labor alter the impact of FDI policy on national welfare. The tension between profits and wages determines whether the optimal policy is designed to encourage FDI.

published proceedings


altmetric score

  • 3

author list (cited authors)

  • Glass, A. J., & Saggi, K.

citation count

  • 34

complete list of authors

  • Glass, AJ||Saggi, K

publication date

  • December 1999