Glass, Amy Jocelyn; Saggi, Kamal - 2000
We study the impact of foreign direct investment (FDI) policies when source firms locate some production in two host … countries. By reducing its tax on multinational production, a host country can attract additional FDI, some of which is diverted … from other host countries. The shift in FDI causes host wages to rise while wages elsewhere fall. The host country with the …