FDI impact from totalization is small
Prados et al ‘19
(María J. Prados*, Erik Meijer, Francisco Pérez-Arce, University of Southern California, “Macroeconomic Effects of Social Security Totalization Agreements,” pg online @ https://dornsife.usc.edu/assets/sites/1283/docs/UM19-Q1wpMRDRC_Prados.pdf //um-ef)
As seen in Figures 7 and 8, the countries are heterogeneous in terms of the size of their investments made in the U.S., and also in terms of the flows of investment they receive from America. Overall, the empirical evidence suggests the totalization agreements affect multinational firms’ decisions regarding location of foreign affiliates. However, the aggregate magnitude of these effects may be small. The complexity of the effects requires a look at the channels through which these treaties modify the firms’ incentives. The effects for each pair of countries likely will depend on each country’s relative advantages in terms of factor endowments, productivity, and tax rates. The next section highlights some of these considerations.