Relative treatment of aliens

How Level Is the Playing Field for Foreign Firms in Developing Countries

Bibliographic Data

ID4237457
AuthorsEmma Aisbett (0000-0003-4649-3579, Australian National University, corresponding author), Carol Mcausland (University of British Columbia), Lauge Poulsen (0000-0002-3978-5357, University College London)
Year2024
Publication date2024-11-13
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueSocio-Economic Review (JOURNAL)
Journal identifiersISSN: 1475-1461 • E-ISSN: 1475-147X
DOI10.1093/ser/mwae045
OpenAlexW4404360667
LanguageEN
Citations received1
References cited34

This article provides the first systematic analysis of whether developing country governments treat foreign firms better, worse or the same as domestic firms. We use a novel econometric estimator to analyze the World Bank's Enterprise Surveys. In contrast to the intuition in much of the literature on the political economy of foreign investment, we show that foreign firms are not treated worse by host state governments on average. Also, whereas governments in low-income countries treat all firms poorly, they treat foreign firms relatively better than comparable domestic firms. This contrasting pattern means that the findings of the large and growing literature on the cross-country causes and consequences of the absolute treatment of foreign firms cannot be transferred to the question of relative treatment. It also has important policy implications-for instance in the context of investment treaties, which grant extensive property right protections to foreign but not domestic investors

Business · Developing country · Economic growth · Economics · Field (mathematics · International trade · Level playing field · Corporate Finance and Governance · Corporate Insolvency and Governance · Mathematics · Taxation and Compliance Studies · Finance

Tools

Open DOIOpen Access