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Official foreign direct investment (FDI) statistics track FDI via direct investing nation rather than ultimate investing country (UIC). If a FDI project is sourced through an overseas subsidiary, normal FDI metrics will register that investment as being from the third country, not the home country of the multinational. There is a growing awareness that the large amount of FDI channeled through special purpose vehicles and offshore financial centers therefore makes official statistics unreliable: investment from certain nations may be significantly under or over counted. According to official statistics, the United States ranks 11th in terms of total amount of foreign direct investment (FDI) in Vietnam. As Vietnam joins the ranks of lower middle-income countries, and becomes more integrated into global value chains, a more representative methodology for calculating FDI would help Vietnam thoughtfully engage with foreign investors and support Vietnam's development objectives. This report, commissioned by the United States Agency for International Development (USAID) in Hanoi includes: 1) A literature review of FDI databases and FDI tracking methods, 2) a comparative analysis of the existing methods for tracking FDI via UIC, 3) a discussion on the feasibility of implementing those methods for Vietnam, 4) a novel method for estimating Vietnam’s inward FDI via UIC, 6) recommendations to USAID for further research and analysis.

We explore the way validity and propriety cues contribute to legitimacy judgments about a practice and explain whether the subunit of a large firm increases or decreases the implementation of this practice. Empirically, we examine the extent to which 65 subsidiaries of a multinational enterprise implemented three corporate social responsibility practices. Adopting a set-theoretic approach, we find that both validity and propriety cues are extremely relevant to the understanding of subunits’ implementation of practices over time. The endorsement of a practice in a subunit’s environment plays a particularly crucial role in the extent to which it is implemented, relative to authorization by the parent firm. Furthermore, subunits strongly rely on the active evaluation of the practice’s propriety, such that the consonance between the two propriety dimensions (strategic importance and value compatibility) is central to implementation increase, while dissonance between them can favor implementation decrease. By advancing our understanding of legitimacy judgment formation and practice implementation patterns, our study enriches explanations of organizational conformity and decoupling, and contributes to our understanding of how firms respond to multiple institutional demands.

We study how upstream tariffs affect downstream investment in US manufacturing firms. Exploiting tariff reductions following multinational trade agreements, we estimate that a 10% decrease of upstream tariffs entails an increase in downstream investment by 4% to 6%. This effect stems from tariff reductions for homogeneous and low-R&D inputs (e.g., cement), consistent with the investment response being due to cost reductions rather than superior foreign technology embodied in imported inputs. Extending the analysis beyond tariffs, we use the sudden increase in Chinese import penetration in an instrumental variable estimation and show that higher import competition leads to higher downstream investment.