ABSTRACT
Foreign direct investment (FDI) is an important aspect of global economic integration: multinational enterprises (MNEs) account for about 10 percent of world output and 30 percent of world export (UNCTAD 2007). Moreover, around three-quarters of total sales to foreign customers are done through FDI and one-quarter through export (Antrás and Yeaple 2013). FDI is generally perceived as bringing various economic benefits to the host country. It will for instance substitute for domestic savings and thereby allow for greater consumption for a given level of investment. Moreover, MNEs control most of the world’s advanced technology which will benefit a host country in terms of higher productivity and incomes. Finally, MNEs have superior access to foreign markets, which increases the host country’s exports and, again, output, and incomes.
