The third essay explores the roles of transaction costs and monitoring costs in multinational firms' decisions on foreign direct investment (FDI). The model predicts that transaction costs and monitoring costs have a negative effect on FDI. To measure these costs, I use proxies (the corporate tax-rate difference, common culture and language) for transaction costs and for monitoring costs (distance, Internet penetration and time-zone difference). Applying a two-stage-least-squares estimation method to the bilateral FDI stock between 1980 and 1997, I find that transaction costs and monitoring costs are crucial factors determining the amount of inward bilateral foreign direct investment stock.Data In this paper, I use the number of web hosts attributed to each country as the measure of Internet penetration in each country. The number of web hosts is provided by the Internet Software Consortium (ISC), which has documented theanbsp;...
|Title||:||Three Essays in International Trade and Development|
|Publisher||:||ProQuest - 2008|