ABSTRACT
This chapter discusses the insights gained from, and the issues involved in, incorporating the activities of multinational corporations (MNCs) into a single country, regional or world economic model, through foreign direct investment (FDI). Specifically, we will deal with general equilibrium (GE) models, but many of these issues arise irrespective of modelling technique. The chapter will proceed as follows: the first section will discuss the insights to be gained by including FDI in a GE model. The second section discusses some of the issues involved in modelling FDI in a GE framework. The third section outlines data problems and constraints. In the fourth section we examine some applications in a GE framework and the fifth section summarises and makes suggestions on potential future work.
