Control Of Foreign Investment Research Articles

Gains to Bidder Firms Revisited: Domestic and Foreign Acquisitions in Canada

We present large sample evidence on the performance of domestic and U.S. (foreign) bid? der firms acquiring Canadian targets. Domestic bidders earn significantly positive average announcement period abnormal returns, while U.S. bidder returns are indistinguishable from zero. Measures of pre- and post-acquisition abnormal accounting performance are also consistent with a superior domestic bidder performance. Domestic bidder announce? ment returns are, on average, greatest for offers involving stock payment and for the bid? ders with the smallest equity size relative to the target. Neither direct foreign investment controls, horizontal product market relationships, nor acquisition propensities explain why domestic bidders outperform their U.S. competitors.

Gains to Bidder Firms Revisited: Domestic and Foreign Acquisitions in Canada

We present large-sample evidence on the performance of domestic and U.S.(foreign) bidder firms acquiring Canadian targets. Domestic bidders earn significantly positive average announcement-period abnormal returns, while U.S. bidder returns are indistinguishable from zero. Measures of pre- and post-acquisition abnormal accounting performance are also consistent with a superior domestic bidder performance. Domestic bidder announcement returns are on average greatest for offers involving stock-payment and for the bidders with the smallest equity size relative to the target. Neither direct foreign investment controls, horizontal product-market relationships, nor acquisition propensities explain why domestic bidders outperform their U.S. competitors.

Managing mineral dependence: Papua New Guinea 1972–89

Papua New Guinea (PNG) managed the mineral booms of 1973–74, 1979–82 and 1987‐89 well compared with other mineral exporting economies. Orthodox macroeconomic policies were one reason for this while the cushion afforded by the slow withdrawal of Australian aid was another. PNG also renegotiated MNC mining contracts in its favour without curbing foreign investment, but it managed its fragile political unity less well. Secession closed a large mine in 1989 while successful rent‐seeking left wage indexation unreformed. Relatively high wages, exchange rate overvaluation and foreign investment controls in non‐mining sectors retarded structural diversification: mineral dependence remains uncomfortably high a generation after the start‐up of the first copper mine.

Taking Control of Foreign Investment: A Case Study of Indigenisation in Nigeria

THIS article examines the efforts of one developing country to reduce the role of foreign investments in its national economy. It looks at measures taken by the government of Nigeria to increase Nigerian control over the economy between 1972 and 1990, in particular at the indigenisation programme undertaken by the government through the provisions of the Nigerian Enterprises Promotion Decrees (NEPDs) of 1972 and 1977,1 and its subsequent modification and partial repeal in the 1980s, culminating with the NEPD 1989. It is hoped that this will provide some insight into the problems faced by host developing States in their efforts to gain control over private foreign investment. Some conclusions will be drawn about the usefulness of indigenisation as a tool in this respect. This article begins with a discussion of the policy of indigenisation and the background to its adoption in Nigeria. The provisions of the indigenisation Decrees, the NEPD 1972 and the NEPD 1977, are then examined and a number of problems are identified. An account is then given of the subsequent relaxation of the programme, beginning in 1981 and culminating in 1989 with the NEPD of that year. Indigenisation is then examined in the context of international law and, finally, some conclusions are drawn regarding its effectiveness as a mechanism for enhancing national sovereignty in the economic sphere. I attempt to state the law of Nigeria as at 1 June 1990.

Foreign Investment Control in the Canadian Mineral Sector: Lessons from the Australian Experience

Foreign Investment Control in the Canadian Mineral Sector: Lessons from the Australian Experience

“THE PAYMENTS IMPACT OF FOREIGN INVESTMENT CONTROLS: REPLY.”

The author of any paper with policy implications welcomes discussion of his results, in the knowledge that what is not discussed is forgotten. In this spirit I welcome Dr. Stevens' paper calling for further examination of my framework for analysing the balance-of-payments effects of controls on foreign investment.' As he notes, it is puzzling that the earlier literature had devoted so much attention to the hard-to-interpret payback periods instead of looking at the kinds of present-value and rate-of-return calculations initiated by my December 1971 article. Stevens goes on to suggest two revisions in the 1971 article, one dealing with estimated trade effects and one extending my framework to cover the case of rapidly growing outflows checked by permanent controls. These points are worth discussing, since other readers of the 1971 article may also have wanted more treatment of them than space permitted in 1971. Yet it turns out that Stevens' comment fails to blunt my 1971 policy conclusions, and my 1971 article's framework appears to have covered all cases correctly.

"The Payments Impact of Foreign Investment Controls: Reply."

"The Payments Impact of Foreign Investment Controls: Reply."

The Payments Impact of Foreign Investment Controls: Comment

The Journal of FinanceVolume 31, Issue 5 p. 1495-1504 Comment THE PAYMENTS IMPACT OF FOREIGN INVESTMENT CONTROLS: COMMENT Guy V. G. Stevens, Guy V. G. Stevens Chief Chief, Quantitative Studies, Division of International Finance, Federal Reserve Board. I am grateful to Roger Craine, Ray Lubitz and the referee, William H. Branson, for very helpful comments. The responsibility for any opinions expressed herein is mine alone.Search for more papers by this author Guy V. G. Stevens, Guy V. G. Stevens Chief Chief, Quantitative Studies, Division of International Finance, Federal Reserve Board. I am grateful to Roger Craine, Ray Lubitz and the referee, William H. Branson, for very helpful comments. The responsibility for any opinions expressed herein is mine alone.Search for more papers by this author First published: December 1976 https://doi.org/10.1111/j.1540-6261.1976.tb03229.x Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Volume31, Issue5December 1976Pages 1495-1504 RelatedInformation

THE PAYMENTS IMPACT OF FOREIGN INVESTMENT CONTROLS: COMMENT

By demonstrating the superiority of the present-value to the recoupment-period criterion, Peter Lindert [2] has made a major contribution to the analysis of foreign investment controls. In fact, after reading Lindert's analysis, one wonders how the recoupment-period criterion got a foothold in the first place: the assessment of the net impact of a control program is clearly dependent on a comparison of capital inflows and outflows occurring at different points in time; and the accepted and traditional way to make such intertemporal comparisons is by a present value calculation. While heartily endorsing this methodological shift, one need not be satisfied with Lindert's use of his newly forged tool. In particular, it is my opinion that his policy conclusion is not proved. For two reasons I should like to take issue with his contention that it is impossible for controls on direct investment to help the U.S. balance of payments.' First, his empirical case, while plausible, is open to objection because it rests on that set of assumptions which is most favorable to his conclusion; alternative assumptions lead to the opposite result. This is the subject of section I. Second, Lindert's theoretical condition for the efficacy of a control program does not cover all cases: in particular, for cases, where the limiting rate of growth of foreign investment is higher than the social rate of discount, a different condition holds. In section II, I provide a simple, but general analysis of the problem, one that covers all cases and does not rely on special simplifying assumptions about the shape of the foreign investment path. Empirical evidence presented in this section suggests that the flow of direct investment to important areas of the world falls into the high growth category. Using the proper theoretical condition for this case, the implication is that for a second reason Lindert's policy conclusion may be invalidated.2

Book Review: Multinationals and International Investment, International Control of Foreign Investment; The Dusseldorf Conference on Multinational Corporations

Book Review: Multinationals and International Investment, International Control of Foreign Investment; The Dusseldorf Conference on Multinational Corporations

On the Balance-of-Payments Effects of Direct Investment and the Efficacy of Controls: Comments on and Extensions of an Article by Peter H. Lindert

By demonstrating the superiority of the present-value to the recoupment-period criterion, Peter Lindert has made a major contribution to the analysis of foreign investment controls. In fact, after reading Lindert's analysis, one wonders how the recoupment-period criterion got a foothold in the first place: the assessment of the net impact of a control program is clearly dependent on a comparison of capital inflows and outflows occurring at different points in time: and the accepted and traditional way to make such intertermporal comparisons is by a present value calculation. Moreover, as I attempt to show below, the present value formulation leads to useful insights into the analysis of the balance of payments effects of direct investment, independent of th existend of controls.

Developments in the Control of Foreign Investment in France

Developments in the Control of Foreign Investment in France

The Payments Impact of Foreign Investment Controls

The Payments Impact of Foreign Investment Controls

The Impact of the U.S. Direct Investment Controls

The voluntary and mandatory direct investment control programs instituted since 1965 were directed at new outflows of funds from the U.S. and reinvested earnings abroad. It was not their aim to curb plant and equipment expenditures as such.11Anthony M. Solomon, “Foreign Investment Controls: Policy and Response.” Law and Contemporary Problems, XXXIV (Winter, 1969), P. 119. But by shifting the financing of U.S. overseas investment away from U.S.-owned to foreign sources of funds, the U.S. government hoped to reduce the balance of payments deficit according to the liquidity definition. To evaluate the record two kinds of questions require answers. First, to what extent can one say that the substantial shifts which occurred in the observed patterns of U.S. foreign affiliates' plant and equipment expenditures and financing were actually caused by the impact of the controls? The problem is whether changing economic conditions at home and abroad could have produced similar patterns in the absence of the programs. Second, in what sense can the regulations then be said to have eased the U.S. balance of payments pressures? The answer here depends upon a complex of factors including, inter alia,, the extent to which capital outflows led to export surplus and whether putative savings on direct investment were squandered elsewhere.© 1971 JIBS. Journal of International Business Studies (1971) 2, 1–14

Foreign Investment Controls: Policy and Response

When the rules governing the international payments system were worked out at Bretton Woods in 1944, their object was to free international trade from restraints. Trade, the expansion and balanced growth of trade, was the route to international prosperity. Countries were to avoid resort to restrictions on trade and current payments. But they were quite free to control capital movements. Indeed Keynes suggested at the time control of capital movements, both inward and outward, should be a permanent feature of the post-war system.' This attitude toward capital movements was, of course, strongly influenced by the disorderly experience of the inter-war years when capital movements in the form of hot money flows were a disruptive and destabilizing force. Capital controls did not, in fact, become a permanent feature of the arrangements, but what is interesting is that in the Bretton Woods system, freedom of capital movement was not thought necessary to national and international prosperity. In the post-war period, international investment, especially direct investment, has grown at a phenomenal clip, faster than world trade, which itself has been growing faster than world income. A few numbers give the picture. The book value of US. direct investments worldwide increased almost fivefold from about $12 billion in I950 to perhaps $60 billion now. U.S. direct investment in Europe increased more than tenfold. The annual output of these overseas enterprises is about $120 billion. This compares with US. export sales of some $30 billion. American foreign investment has accounted for the largest flows, but businesses in other countries have also made appreciable foreign investments. Much international trade is now trade between parent company and affiliate, and increasingly foreign investment is a substitute for foreign trade. One can speculate whether, were the Bretton Woods Conference held today, the rules would be written differently, i.e., to protect the free flow of capital as well as of current items. It was not from any lack of appreciation of the contribution to the U.S. balance of payments and to the growth of the world economy made by foreign direct investments that the voluntary guidelines and the mandatory restraints were adopted. Nor

Assessing the Foreign Investment Controls

The objective of the foreign investment controls has been declared to be a reduction of foreign investment outlays so as to improve U.S. international payments. This objective should be pursued under two general constraints: one is the equitable treatment of capital-exporting companies covered by the controls, and the other is avoidance of unnecessary interference in business practice. Criticism can be leveled at the control procedures on the grounds that they are inequitable; the Office of Foreign Direct Investment (OFDI) admits that some inequities still exist and is trying to correct them. Some procedures also seem to interfere unnecessarily with business practice. But these criticisms merely call for improvement in the provisions, not for the abandonment of controls. The criticism that I wish to make is against the over-all objective of the Government of cutting U.S. foreign investment. The techniques which have been employed are probably either neutral in their impact on international payments or damaging to the U.S. deficit. OFDI does not want to reduce all foreign outlays by U.S. companies, however; capital outlays which are financed from foreign sources (borrowing abroad and depreciation allowances) are excluded from the controls. The foreign outlays which the Government wants reduced are those financed from dollar outflows and retained earnings abroad. An analysis of the returns to the U.S. balance of payments from foreign direct investment outlays indicates that, on the average, there has been a prompt recoupment of dollar outflows through earnings, sales of capital equipment, and concomitant exports.' If dollar outflows are recouped in a short time, every effort should

Control of Foreign Investment in France

Control of Foreign Investment in France