Home country effects of foreign direct investment: From a small economy to a large economy
AbstractPrevious studies on home country effects mainly focused on FDI from large developed economies to other countries. But today's super recipient is a relatively larger economy than its investors and many of these investors are not classified as "developed economies." A simple Ak type model implies that a small and more developed country investing in a large and less developed country will experience decreases in both employment and income disparity (compared to the recipient country) as the less-developed recipient country gains the higher technology of production through FDI inflows. The empirical results for the Four Tigers (source countries) and China (recipient country) are consistent with our theoretical model of FDI outflows. We also find that FDI outflows to China decrease the ratio of exports to GDP only for small source countries, even though a higher investment in China raises the share of these countries' exports-to-China to China's total imports.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 26 (2009)
Issue (Month): 5 (September)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/30411
Foreign direct investment Capital outflows Home country effects;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Baldwin, Richard & Braconier, Henrik & Forslid, Rikard, 1999.
"Multinationals, Endogenous Growth and Technological Spillovers: Theory and Evidence,"
CEPR Discussion Papers
2155, C.E.P.R. Discussion Papers.
- Richard Baldwin & Henrik Braconier & Rikard Forslid, 2005. "Multinationals, Endogenous Growth, and Technological Spillovers: Theory and Evidence," Review of International Economics, Wiley Blackwell, vol. 13(5), pages 945-963, November.
- Braconier, Henrik & Baldwin, Richard E. & Forslid, Rikard, 1999. "Multinationals, Endogenous Growth and Technological Spillovers: Theory and Evidence," Working Paper Series 519, Research Institute of Industrial Economics.
- Helpman, Elhanan, 1984.
"A Simple Theory of International Trade with Multinational Corporations,"
3445092, Harvard University Department of Economics.
- Helpman, Elhanan, 1984. "A Simple Theory of International Trade with Multinational Corporations," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 451-71, June.
- Heston, Alan & Summers, Robert, 1996. "International Price and Quantity Comparisons: Potentials and Pitfalls," American Economic Review, American Economic Association, vol. 86(2), pages 20-24, May.
- Baharumshah, Ahmad Zubaidi & Thanoon, Marwan Abdul-Malik, 2006. "Foreign capital flows and economic growth in East Asian countries," China Economic Review, Elsevier, vol. 17(1), pages 70-83.
- Sanjaya Lall and Manuel Albaladejo (QEH), .
"China’s Competitive Performance: A Threat To East Asian Manufactured Exports?,"
QEH Working Papers
qehwps110, Queen Elizabeth House, University of Oxford.
- Lall, Sanjaya & Albaladejo, Manuel, 2004. "China's Competitive Performance: A Threat to East Asian Manufactured Exports?," World Development, Elsevier, vol. 32(9), pages 1441-1466, September.
- Markusen, James R. & Venables, Anthony J., 1998.
"Multinational firms and the new trade theory,"
Journal of International Economics,
Elsevier, vol. 46(2), pages 183-203, December.
- Bruno Van Pottelsberghe & Frank Lichtenberg, 2001.
"Does foreign direct investment transfer technology across borders?,"
ULB Institutional Repository
2013/6221, ULB -- Universite Libre de Bruxelles.
- Bruno Van Pottelsberghe De La Potterie & Frank Lichtenberg, 2001. "Does Foreign Direct Investment Transfer Technology Across Borders?," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 490-497, August.
- Joshua Aizenman, 1994.
"Foreign Direct Investment, Employment Volatility and Cyclical Dumping,"
NBER Working Papers
4683, National Bureau of Economic Research, Inc.
- Aizenman, Joshua, 1996. "Foreign Direct Investment, Employment Volatility and Cyclical Dumping," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 1(2), pages 117-31, April.
- Sourafel Girma, 2003.
"Absorptive capacity and productivity spillovers From FDI: a threshold regression analysis,"
European Economy Group Working Papers
25, European Economy Group.
- Sourafel Girma, 2005. "Absorptive Capacity and Productivity Spillovers from FDI: A Threshold Regression Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(3), pages 281-306, 06.
- Minsoo Lee & MoonJoong Tcha, 2002.
"The Color of Money: The Effects of Foreign Direct Investment on Economic Growth in Transition Economies,"
Economics Discussion / Working Papers
02-16, The University of Western Australia, Department of Economics.
- Minsoo Lee & MoonJoong Tcha, 2004. "The color of money: The effects of foreign direct investment on economic growth in transition economies," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 140(2), pages 211-229, June.
- Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998.
"How does foreign direct investment affect economic growth?1,"
Journal of International Economics,
Elsevier, vol. 45(1), pages 115-135, June.
- Eduardo Borensztein & Jose De Gregorio & Jong-Wha Lee, 1995. "How Does Foreign Direct Investment Affect Economic Growth?," NBER Working Papers 5057, National Bureau of Economic Research, Inc.
- Peter Nunnenkamp, 2002.
"To What Extent Can Foreign Direct Investment Help Achieve International Development Goals?,"
Kiel Working Papers
1128, Kiel Institute for the World Economy.
- Peter Nunnenkamp, 2004. "To What Extent Can Foreign Direct Investment Help Achieve International Development Goals?," The World Economy, Wiley Blackwell, vol. 27(5), pages 657-677, 05.
- Harm Zebregs & Wanda Tseng, 2002. "Foreign Direct Investment in China: Some Lessons for Other Countries," IMF Policy Discussion Papers 02/3, International Monetary Fund.
- Liu, Xiaming & Wang, Chengang & Wei, Yingqi, 2001. "Causal links between foreign direct investment and trade in China," China Economic Review, Elsevier, vol. 12(2-3), pages 190-202.
- Balcao Reis, Ana, 2001. "On the welfare effects of foreign investment," Journal of International Economics, Elsevier, vol. 54(2), pages 411-427, August.
- Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc.
- Honglin Zhang, Kevin, 2005. "Why does so much FDI from Hong Kong and Taiwan go to Mainland China?," China Economic Review, Elsevier, vol. 16(3), pages 293-307.
- Anuradha Dayal-Gulati & Aasim M. Husain, 2002. "Centripetal Forces in China's Economic Takeoff," IMF Staff Papers, Palgrave Macmillan, vol. 49(3), pages 4.
- Changkyu Choi, 2004. "Foreign direct investment and income convergence," Applied Economics, Taylor & Francis Journals, vol. 36(10), pages 1045-1049.
- Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004.
"Export Versus FDI with Heterogeneous Firms,"
American Economic Review,
American Economic Association, vol. 94(1), pages 300-316, March.
- Gao, Ting, 2005. "Foreign direct investment and growth under economic integration," Journal of International Economics, Elsevier, vol. 67(1), pages 157-174, September.
- Lucas, Robert E, Jr, 1990. "Why Doesn't Capital Flow from Rich to Poor Countries?," American Economic Review, American Economic Association, vol. 80(2), pages 92-96, May.
- Liu, Bih Jane & Huang, Fung-Mey, 2005. "Outward Direct Investment, Reverse Import, and Domestic Production : Evidence from Taiwanese Manufacturing Firms," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 46(1), pages 65-84, June.
- Shang-Jin Wei, 2000. "Why Does China Attract So Little Foreign Direct Investment?," NBER Chapters, in: The Role of Foreign Direct Investment in East Asian Economic Development, NBER-EASE Volume 9, pages 239-265 National Bureau of Economic Research, Inc.
- Joze Mencinger, 2003. "Does Foreign Direct Investment Always Enhance Economic Growth?," Kyklos, Wiley Blackwell, vol. 56(4), pages 491-508, November.
- Schneider, Patricia Higino, 2005. "International trade, economic growth and intellectual property rights: A panel data study of developed and developing countries," Journal of Development Economics, Elsevier, vol. 78(2), pages 529-547, December.
- Zhang , Kevin Honglin, 2001. "Roads to Prosperity: Assessing the Impact of Foreign Direct Investment on Economic Growth in China," Economia Internazionale / International Economics, Camera di Commercio di Genova, vol. 54(1), pages 113-125.
- Seungjin Kim, 2000. "Effects of Outward Foreign Direct Investment on Home Country Performance: Evidence from Korea," NBER Chapters, in: The Role of Foreign Direct Investment in East Asian Economic Development, NBER-EASE Volume 9, pages 295-317 National Bureau of Economic Research, Inc.
- Wu, Yanrui, 2000. "Measuring the performance of foreign direct investment: a case study of China," Economics Letters, Elsevier, vol. 66(2), pages 143-150, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.