VERs, Quid Pro Quo DFI and VIEs: Political-Economy-Theoretic Analyses

The paper addresses three different phenomena: VERs, their causes and consequences; Quid Pro Quo direct foreign investment; and VIEs. Quid Pro Quo direct foreign investment relates to investment that is undertaken in one period to influence the probability of protection being imposed in the next period. VIEs are “voluntary import expansions” which define quantity outcomes in the domestic markets of the country on which they are imposed, as when U.S. requires that a certain share of the Japanese market in an industry must be supplied by U.S. exports by a certain date. [410]