>At 01:47 PM 4/16/2002 -0400, you wrote:
>>One version of that can be estimated by looking at BEA's direct
>>investment data for the U.S.
>><http://www.bea.gov/bea/di/di1usdop.htm> - divide profits by the
>>capital stock. When I've done it, I've been surprised at how low
>>returns are in some "developing" countries, and how high they are
>>in some "developed" ones.
>
>Well that's precisely what I'm finding and it seems so
>counterintuitive not to mention unsupported by traditional theories
>like Solow's growth theory...hmm. Thanks.
There are at least two possible explanations. One is that the data stink(s). There are lots of estimates and imputations involved. Since MNCs, esp in the Third World, are no doubt trying to hide profits from both the U.S. and host governments, the profit figures may be all wrong. Second is that the figures are more or less right, but that weak economies in Third World host countries (as in Latin America, where sales to domestic markets can be important) and low productivity keep down profits. Given the overwhelming flow of FDI to First World targets, possibility 2) may be more right than intuition suggests.
Doug