internal debt, a number of developing countries do not. In this paper, we analyze the effect on FDI and host country welfare of … capitalization limits may be needed in developing countries to attract FDI, the amount of debt financing allowed by the permissive …

institutional quality can be made worse off adopting policies that attract FDI as the benefits from higher wages and production are … ability to collect taxes, since the benefit of attracting more FDI outstrips the benefit of increased tax revenue. Countries … with very strong institutions benefit from FDI and should utilize their full ability to collect taxes. …