Common Contracts
1 similar null contracts
Multilateral investment agreement in a political equilibriumOctober 24th, 2006
Hence, FDI inflows exert upward pressure on rental rates. While this is not directly obvious from vertical FDI theory, it corresponds with empirical stylized facts. Quite important for the perception of politicians that negotiated the MAI in the late 90ies was the experience of Ireland in the early 90ies. This country was able to trigger a spectacular catch-up by an FDI promotion strategy including a generous tax break on MNE profits repatriated from Ireland. Barry and Bradley (1996) report that inward FDI was both human-capital and physical-capital intensive. At the same time, relative high-skilled wages and real-estate rental rates rose sharply with incoming FDI flows in line with my model. Similar relative factor price changes are found in Feenstra and Hanson (1997) for Mexico, after NAFTA was founded. NAFTA contained FDI provisions quite similar to the ones in the MAI draft.8
