Commercial Policy and Foreign Ownership

Jota Ishikawa, Yoichi Sugita, Laixun Zhao

Research output: Contribution to journalArticlepeer-review


Foreign multinationals often not only export but also control local firms through FDI. This paper examines the various effects of trade and industrial policies when exports and FDI coexist. We focus on the case in which a foreign firm has full control of a local firm through partial ownership. Cross-border ownership on the basis of both financial interests and corporate control leads to horizontal market linkages through which tariffs and production subsidies may harm locally owned firms but benefit the foreign firm. Foreign ownership regulation benefits locally owned firms. These results could have strong policy implications for developing countries that attract an increasing share of world FDI.

Original languageEnglish
Pages (from-to)300-312
Number of pages13
JournalReview of International Economics
Issue number2
Publication statusPublished - 2011 May
Externally publishedYes

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development


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