The Analysis of Aid for Trade and FDI

• Main Authors: Liu, Hanyu, 劉瀚榆
• Other Authors: Chen, Fang-Yueh
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/94477335629497625093

博士 === 國立中正大學 === 國際經濟研究所 === 99 === This thesis is composed of three articles. In Chapter 2, we investigate economic effects of Aid for Trade (AFT) in the process of trade facilitation, including the condition when a paradox of aid occurs and the relevance of strategic trade policy of countries in trade. The main results are as follow. (1) If a donor country has a larger home market, the paradox of aid is more likely to occur. (2) An AFT helps to enhance trade liberalization. However, the trade liberalization does not help to promote the AFT. In Chapter 3, we adopt a framework of “Barbell model” proposed by Hwang and Mai (1991) and discuss how a monopoly firm can signal the quality of products to consumers through location choice and through entry modes. The entry mode for the low quality firm depends on the fixed cost of Foreign Direct Investment (FDI). A low quality firm in the incomplete information regime chooses the location to set up its factory as that in the full information regime. Regardless of entry modes, the high quality firm chooses a location near the border to signal itself under incomplete information. In addition, a high quality firm, choosing the export mode in the case of full information, will switch to the FDI mode in the case of incomplete information. In Chapter 4, we study how a monopoly firm can signal the quality of product by the price and location of FDI. We also examine the optimal tariff of the importing country. We obtain a unique separating equilibrium, in which the high (low) quality firm chooses the country with high (low) production cost as a production base. The price of high (low) quality in incomplete information is higher than (as the same as) that in the full information. The tariff of products from countries of low production costs is the same as that in the full information. The optimal tariff of products from the high production cost country is a suboptimal corner solution. The optimal tariff of both high and low quality depends on the relative differentiation of cost and quality. Finally, we demonstrate the social welfare in the full information is higher than in the incomplete information.