FOREIGN DIRECT INVESTMENT, FINANCIAL INTERMEDIATION, AND MARKET IMPERFECTIONS
CATALINA CRACIUNESCUABSTRACT. Javorcik et al. affirm that while for European investors intermediate inputs sourced from home country suppliers comply with the rules of origin and thus can be exported to the EU on preferential terms, this would not be the case for home country suppliers of American or Asian multinationals. Aysan provide a model to account for the empirical evidence that volatility reduces growth: greater volatility increases the cost associated with capital market imperfections and induces the financial intermediaries to charge higher interest rates. Fernald and Neiman note that the newly industrialized economies (NIEs) of Asia are the fastest-growing economies in the world since 1960.