国家没有区位优势时的外商直接投资竞争外文翻译Word格式.docx

1、Competition for foreign direct investment when countries Are not sure of site values 出 处：International Review of Economics and Finance 作 者：Koray Kiymaz and Leon Taylor 原文： Competition for foreign direct investment when countries are not sure of site valuesAbstract The fiscal tug-of-war between two c

2、ountries to play host to a foreign-owned firm is like a Nash game. Suppose that the countries are not sure how much the firm values the sites that they offer to it. Also suppose that the countries fashion their expectation of site value by assigning the same likelihood to each value that they deem p

3、ossible. Then, if they are quite unsure about site values, they will offer small subsidies to the firm. If they are pretty sure about site values,they will offer large subsidies. Hereis the intuition behind theresults: When a country is unsure about the value of its site, it is also unsure if a stin

4、gy offer will drive the firm to its rival, so it may take the chance and make a stingy offer rather than a generous one. 1. Introduction Governments often vie for a footloose firm by offering tax cuts or subsidies.Analyses of such a contest usually assume that its participants know full well its cir

5、cumstances. In reality, its participants usually know little. For instance, government officials must guess at how much a firm values a site when they have no competitive bids to refer to. That is usually the case when government recruits industry because the lack of local land buyers is what spurs

6、the government to seek buyers elsewhere.The governments guess about the value of a site will affect its offer of incentives to a potential buyer. But if the government knows little about the value of its own site, then it is likely to know little about the value of a site elsewhere that the firm cou

7、ld occupy. The governments guess about that other site will also affect its offer of incentives. How these guesses will affect its offer is a subtle question, particularly when it must counter the offer of another government that guesses.The question is critical to the early stage of a site search,

8、when the firm decides where to go. In this stage, the firm discloses stark details of its project to a few governments and solicits their preliminary bids. （Hood and Young, 1985, found that this strategy was typical in the searches of automotive firms for foreign sites.） Among the governments, the f

9、irm will later pick one with which to negotiate in earnest. Until then, governments game more with one another than with the firm, which carefully conceals its poker hand.This paper analyzes that early stage of a site search. The key characteristic of the stage is that the firm keeps the governments

10、 in the dark about the values that it attaches to their industrial sites. The paper considers how the resulting uncertainty of governments affects their offers of incentives to the firm.One can obtain sharp answers to this question because one can reasonably presume that the governments are sure abo

11、ut a few things. In particular, one can presume that each government is sure of how the other would counter its offer, for it is likely that the governments have gamed before, perhaps in the conduct of foreign relations. We need not presume, however, that either government is sure of how the firm wo

12、uld react to their offers.In general, our analysis applies to economic competition between governments at the local, state, or national level. In particular, it will motivate the mathematics by addressing contests between countries for foreign direct investment （FDI）.We favor the international appli

13、cation for its timeliness. Through the 1970s and until the late 1980s, analysts posited that the foreign firm and the host treated one another warily, like monopolies. Vernons 1971 model of bilateral monopoly dominated the literature, and the shift of bargaining power from oil extractors to oil prod

14、ucers dominated the news. In recent years, however, Third World hosts have vied for foreign firms by offering subsidies to them as well as by lifting restrictions on them.Over time, models of competition that can apply to countries vying for foreigndirect investment have come to stress the aggressiv

15、e tactics of the potential hosts in pursuing firms: the construction of infrastructure to entice them; the willingness to reopen negotiations with them or even to bid in an auction for them. Doyle and van Wijnbergen （1994） analyzed a firm that procures tax holidays by bargaining with one Government

16、at a time.Bond and amuelson（1986）took a similar tack,and Andersson（1991） examined how sequential bargaining affects the distribution of gains from foreign direct investment between host and firm. Black and Hoyt （1989） model a firm That negotiates with several governments at the same time and then ch

17、oose sits locationonce and for all. In a new tradition, King and Welling （1992） examine a firm that can relocate. In each of two periods, the firm conducts an auction between two regions bidding for its plant. King et al. （1993） extend the model so that governments can build infrastructure first and

18、 then bid in an auction for a firm.Several of these models allow for uncertainty.For example,Black and Hoy texamine uncertainty about how much the firm can produce in one site rather than another, and King and Welling consider uncertainty over the sunk cost of building the plant. The contribution th

19、at our article tries to make to this literature, however, focuses on he uncertainty of potential hosts about the relative value of their plant sites.That a few countries now compete for a foot loose firm is the main point of departure for our analysis of uncertainty. In particular, we branch from th

20、e work that treats, as paramount, the uncertainty that affects bargaining between the firm and its chosen host.We branchfrom thiswork becauseunlessitis enrichedby moretheorysome of its main implications may no longer describe so well the world that we know.For instance, Vernon （1971） considers a poo

21、r country that discovers a deposit of raw material. The country does not know how to exploit the deposit, so it sells exploitation rights to a foreign-owned firm, and it does so cheaply because it must compensate the firm for taking a risk. The host invites in the firm partly to learn how it exploit

22、s the raw material. Once the host learns, it will claim for itself the profits from future exploits. Vernones que theory thus implied that, over time, as poor coun-tries learned more of the technology of the foreign firms on their soil, they would take over more of them.By the late 1980s, however, t

23、he wave of nationalizations in the Third World had ebbed, even though there were still plenty of firms to seize, as Andersson found in 1991. Where, for all its power, might Vernonesque theory have gone astray? We suspect that a missing piece of the puzzle is that hosts now compete for a firm when th

24、ey are unsure of its location costs. Seizing a firm today can hurt the chances of a potential host in the competition for another firm tomorrow if the host does not know how much to offer the sought-after firm to offset the increase in its cost expecta-tion of costs that would result from the earlie

25、r seizure.Generally, the host cannot be sure of how much to offer the firm to locate in its borders, largely because it cannot precisely estimate the political, social, and cultural costs that the firm would face in foreign production. Such costs do not fit comfortably beneath the measuring rod of m

26、oney. While such intangible costs may vary with the firms level of physical capital, they do not typically vary with its scale of production. And so the analysis will treat political,social,and culturalcosts as intangible fixed costs.Firms appear to shun nations that are politically or socially inst

27、able. Stevens （1969） as well as Schneider and Frey （1985） have provided statistical evidence of this point, and Pfeffermann （1992） has drawn upon World Bank experience. Since such fixed costs as political instability matter to the firm, they also matter to the host. In particular, thefirms estimate

28、of intangible fixed costs matters to the host, yet it has trouble inferring this cost estimate, in large part because it lacks the firms industrial experience.For instance,the firm knows more than prospective hosts about the value that the plant and equipment would add to its operations. The firm ca

29、n thus estimate the cost to it of a seizure of capital more precisely than prospective hosts can.We investigate how two countries compete for a firm when they are unsure of itsfixed costs of location. Given this uncertainty, each country determines the size of The subsidy that it would offer the fir

30、m to occupy its site.This determination is strategic, since the country considers the subsidy that its rival would offer the firm. Although The countries share the same beliefs about the values of their sites,the sites themselves differ. To describe the sites as differentiated products offered by co

31、untries, we draw upon industrial organization models, especially that of Perloff and Salop （1985）. Section 2 begins by analyzing competitive offers of subsidies by countries that are sure of site values. This case yields a benchmark by which to judge the effects of uncertainty on incentivesthe case

32、that we consider next. The aim of the analysis is to guide an empirical study, and Section 3 considers empirical implications that one may test.2. Conclusions and reflections This simple model of competition between two host countries for a foreign firm suggests that large subsidies are extraneous for the country with the larger market orthe better infrastructure. That finding is broadly consistent with statistical work pub-lished by Root and Ahmed （1978）. They carried out a multiple discriminant analysis of three groups of developing countries. The groups differed from one an