| Summary: | 碩士 === 淡江大學 === 產業經濟學系 === 88 === The progress of productive technology makes the world become more and more integrated. Among others’ the two important contributors to the world integration are international trade and foreign direct investment (FDI). In recent years, the growing rate of multinational enterprises (MNEs) direct investment have raised very fast. In this dissertation, we try to discuss that in order to protect the host intermediate good industry, the host government’s optimal local content requirement (LCR) policy on the MNE.
There are several findings in this dissertation.
If the LCR to the host (foreign) firm that produces final goods is low, LCR will increase the price of host intermediate good.
If host government sets a great difference of LCR between host and foreign firms, then an increment of the price of intermediate goods would increase the price of host intermediate goods. On contrastlry, if LCRs for between host and foreign firms is not far different, then an increment of the world price of intermediate good would decrease the price of host intermediate goods.
When the host government doesn’t require LCR to the host firm, host government’s optimal LCR on foreign firm would require 100 percent.
When the host government can’t obtain the intermediate goods by import and the host market size is large (or the host intermediate goods’ cost is small), the host government should require 100 percent of LCR to the foreign firm. Otherwise, the host government shouldn’t require LCR to the foreign firm.
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