Channeling domestic savings into productive investment under asymmetric information: the essential role of foreign direct investment
Foreign direct investment (FDI) is observed to be a predominant form of capital flows to low and middle income countries with insufficiently developed capital markets. This paper analyzes the problem of channeling domestic savings into productive investment in the presence of asymmetric information...
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| Main Authors: | , , |
|---|---|
| Format: | Book |
| Language: | English |
| Published: |
Cambridge, Mass.
1997
|
| Series: | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series
6338 |
| Subjects: | |
| Online Access: | Volltext |
| Summary: | Foreign direct investment (FDI) is observed to be a predominant form of capital flows to low and middle income countries with insufficiently developed capital markets. This paper analyzes the problem of channeling domestic savings into productive investment in the presence of asymmetric information between the managing owners of firms and other portfolio stakeholders. We emphasize the crucial role played by FDI in sustaining equity-financed capital investment for economies plagued by such information problems. Similar problems also exist for foreign portfolio debt flows. The paper identifies how, in the presence of information asymmetry, different capital market structures may lead to foreign over- or under-investment and to domestic under- or over-saving, and thus to inefficient equilibria. We show how corrective tax-subsidy policies consisting of taxes on corporate income and the capital incomes of both residents and nonresidents can restore efficiency. |
| Physical Description: | 27 S. graph. Darst. |
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| 520 | 3 | |a Foreign direct investment (FDI) is observed to be a predominant form of capital flows to low and middle income countries with insufficiently developed capital markets. This paper analyzes the problem of channeling domestic savings into productive investment in the presence of asymmetric information between the managing owners of firms and other portfolio stakeholders. We emphasize the crucial role played by FDI in sustaining equity-financed capital investment for economies plagued by such information problems. Similar problems also exist for foreign portfolio debt flows. The paper identifies how, in the presence of information asymmetry, different capital market structures may lead to foreign over- or under-investment and to domestic under- or over-saving, and thus to inefficient equilibria. We show how corrective tax-subsidy policies consisting of taxes on corporate income and the capital incomes of both residents and nonresidents can restore efficiency. | |
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| 700 | 1 | |a Yuen, Chi-Wa |e Verfasser |4 aut | |
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| indexdate | 2024-07-09T18:16:06Z |
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| language | English |
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| series2 | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |
| spelling | Razin, Asaf 1941- Verfasser (DE-588)124527051 aut Channeling domestic savings into productive investment under asymmetric information the essential role of foreign direct investment Assaf Razin ; Efraim Sadka ; Chi-Wa Yuen Cambridge, Mass. 1997 27 S. graph. Darst. txt rdacontent n rdamedia nc rdacarrier National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series 6338 Foreign direct investment (FDI) is observed to be a predominant form of capital flows to low and middle income countries with insufficiently developed capital markets. This paper analyzes the problem of channeling domestic savings into productive investment in the presence of asymmetric information between the managing owners of firms and other portfolio stakeholders. We emphasize the crucial role played by FDI in sustaining equity-financed capital investment for economies plagued by such information problems. Similar problems also exist for foreign portfolio debt flows. The paper identifies how, in the presence of information asymmetry, different capital market structures may lead to foreign over- or under-investment and to domestic under- or over-saving, and thus to inefficient equilibria. We show how corrective tax-subsidy policies consisting of taxes on corporate income and the capital incomes of both residents and nonresidents can restore efficiency. Mathematisches Modell Investments, Foreign Mathematical models Saving and investment Mathematical models Tsadḳah, Efrayim 1946- Verfasser (DE-588)103741399 aut Yuen, Chi-Wa Verfasser aut Erscheint auch als Online-Ausgabe National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series 6338 (DE-604)BV002801238 6338 http://papers.nber.org/papers/w6338.pdf kostenfrei Volltext |
| spellingShingle | Razin, Asaf 1941- Tsadḳah, Efrayim 1946- Yuen, Chi-Wa Channeling domestic savings into productive investment under asymmetric information the essential role of foreign direct investment National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series Mathematisches Modell Investments, Foreign Mathematical models Saving and investment Mathematical models |
| title | Channeling domestic savings into productive investment under asymmetric information the essential role of foreign direct investment |
| title_auth | Channeling domestic savings into productive investment under asymmetric information the essential role of foreign direct investment |
| title_exact_search | Channeling domestic savings into productive investment under asymmetric information the essential role of foreign direct investment |
| title_full | Channeling domestic savings into productive investment under asymmetric information the essential role of foreign direct investment Assaf Razin ; Efraim Sadka ; Chi-Wa Yuen |
| title_fullStr | Channeling domestic savings into productive investment under asymmetric information the essential role of foreign direct investment Assaf Razin ; Efraim Sadka ; Chi-Wa Yuen |
| title_full_unstemmed | Channeling domestic savings into productive investment under asymmetric information the essential role of foreign direct investment Assaf Razin ; Efraim Sadka ; Chi-Wa Yuen |
| title_short | Channeling domestic savings into productive investment under asymmetric information |
| title_sort | channeling domestic savings into productive investment under asymmetric information the essential role of foreign direct investment |
| title_sub | the essential role of foreign direct investment |
| topic | Mathematisches Modell Investments, Foreign Mathematical models Saving and investment Mathematical models |
| topic_facet | Mathematisches Modell Investments, Foreign Mathematical models Saving and investment Mathematical models |
| url | http://papers.nber.org/papers/w6338.pdf |
| volume_link | (DE-604)BV002801238 |
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