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Foreign investment, market structure and industrial performance (English)

The objective of the present volume is to present a way of thinking analytically about foreign corporations and industrial performance -- a way that strips some of the ideology or romanticism from debate. The authors begin from the hypothesis that the distribution of benefits from transnational investment between host country and company depends fundamentally on the competitive structure of markets in the host country. The most important determinants of the competitive environment are host country policy and rivalry among international competitors. In this sense, the impact of transnational corporation's (TNC) on host countries is predicated on their influence on domestic markets structure, how they interact with competitors, and the extent to which competition compels firms to produce efficiently and search diligently for new markets. In an environment insulated from competition -- whether from barriers to entry created by governments or by firm practices -- excess profits and economic inefficiency will become the norm, for both foreign and national firms.




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Frischtak, Claudio R. Newfarmer, Richard S. FPD

Foreign investment, market structure and industrial performance (English). Industry and Energy Department working paper. Industry series paper,no. 69 Washington, D.C. : World Bank Group.