The standard argument says that in the presence of positive spillovers foreign direct investment should be promoted and subsidized. In contrast, this Paper claims that the very existence of such spillovers may require temporarily restricting and taxing inward FDI. Our argument in favour of...

This Paper surveys the theoretical literature on the effect of soft budget constraints (SBC) on economies in transition from centralization to capitalism; it also reviews our understanding of SBC in general. It focuses on the conception of the SBC syndrome as a commitment problem. We show that...

This paper studies alternative methods of privatizing a formerly communist firm in the presence of imperfect risk markets. The methods include cash sales, a give-away scheme, and a participation contract where the government retains a sleeping fractional ownership in the firm. It is shown that...

Gains from productivity and knowledge transmission arising from the presence of foreign firms has received a good deal of empirical attention, but micro-foundations for this mechanism are weak. Here we focus on production by foreign experts who may train domestic unskilled workers who work with...

International R&D activities have grown significantly over the last two decades. Both the number of actors involved, as well as the importance of the technological activity carried out abroad, has considerably increased. We aim to quantify the international generation of knowledge for the case...

The research activities of multinational firms is increasingly mobile raising concerns about displacement of high-skilled employment in headquarter countries. We estimate of the impact offshoring inventors has on firms' use of inventors at home using within firm variation across industries. We...

We analyze a two-country model of Foreign Direct Investment (FDI). Two firms, each of which is originally situated in only one of the two countries, first decide whether to build a plant in the foreign country. Then, they decide whether to relocate R&D activities. Finally, they engage in...

This Paper analyses the production efficiency gains in terms of technology transfer and labour productivity changes caused by diverse degrees of foreign ownership. The analysis is based on a sample of 4056 domestic and foreign manufacturing firms operating in Greece in 1997. Departures from...

This paper examines the effects on technology transfer and spillovers deriving from ownership sharing of foreign multinational affiliates. More specifically, we try to answer two questions, using unpublished Indonesian micro data. First, do establishments with minority and majority ownership...

This paper is the Introduction to a special issue of European Economy on `The Path of Reform in Central and Eastern Europe'. It discusses the sources of the current wave of `Europessimism': exogenous shocks, adjustment costs, sequencing errors, and other policy errors. This analysis may help in...