Date of Award

8-2012

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Legacy Department

Economics

Advisor

Tsui, Kevin K

Committee Member

Maloney , Michael T

Committee Member

Jerzmanowski , Michal M

Committee Member

Baier , Scott L

Abstract

This dissertation explores several related themes in international economics and focuses on uncovering the impacts of government actions on multinational firms' trade and investment decisions.
In the first essay 'Country-level Property Rights Protection and behavior of Multinational Enterprises' I provide the motivation for the other two chapters of this dissertation, and explain why I have chosen country level property rights protection to explain heterogeneity in the behavior of multinational enterprises.
In the second essay 'The role of Intellectual Property Rights in the relation between Foreign Direct Investment and Growth' I study the relation between strength of intellectual property rights (IPR) protection, foreign direct investments (FDI) by multinational enterprises (MNEs) and country-level economic development. The existing theoretical literature predicts that the welfare implications of IPR reform are ambiguous, and depend on the extent of FDI in the IPR-reforming country. However, both firm- and industry-level analyses find that stricter IPR laws increase industrial development, especially among multinational firms in technology-intensive industries. In this paper I examine whether the impact of tighter IPR on GDP and TFP growth is different for countries with different levels of FDI, because general equilibrium considerations might offset or even reverse the partial equilibrium effects found by the micro literature. Using dynamic panel data techniques and a sample of 103 countries over 1970-2009, I find that although FDI and IPR have positive effects on economic growth for most of the countries, stronger IPR mitigates the growth effect of FDI. Moreover, at the highest observed levels of FDI, it appears that more lax IPR increases the growth rate. The mitigating effect of IPR on growth effect of FDI works through capital accumulation as well as improvements in TFP.
In the third essay 'Political limits on the World Oil Trade: Firm-level Evidence from US firms' I analyze how international politics affects trade patterns. I construct a firm-level dataset for U.S. oil-importing companies over 1986-2010 to test whether the state of international relations with the trading partners of the U.S. affect the import behavior of U.S. firms. To measure 'political distance' between the U.S. and its trading partners I use voting records from the UN General Assembly. I find that U.S. firms import significantly less oil from political opponents of the U.S. My conjecture is that the decrease in oil imports is mainly driven by large, vertically-integrated U.S. firms that engage in foreign direct investment (FDI) overseas.

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