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Outward FDI and domestic investment in two industrialized countries

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  • Herzer, Dierk
  • Schrooten, Mechthild

Abstract

Using cointegration techniques, we find that in the US, outward FDI has positive long-run effects on domestic investment. In Germany, this complementary relationship exists only in the short run. In the long run, outward FDI substitutes for German domestic investment.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 99 (2008)
Issue (Month): 1 (April)
Pages: 139-143

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Handle: RePEc:eee:ecolet:v:99:y:2008:i:1:p:139-143

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Web page: http://www.elsevier.com/locate/ecolet

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References

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  1. Stevens, Guy V. G. & Lipsey, Robert E., 1992. "Interactions between domestic and foreign investment," Journal of International Money and Finance, Elsevier, vol. 11(1), pages 40-62, February.
  2. Stock, James H, 1987. "Asymptotic Properties of Least Squares Estimators of Cointegrating Vectors," Econometrica, Econometric Society, vol. 55(5), pages 1035-56, September.
  3. Martin S. Feldstein, 1995. "The Effects of Outbound Foreign Direct Investment on the Domestic Capital Stock," NBER Chapters, in: The Effects of Taxation on Multinational Corporations, pages 43-66 National Bureau of Economic Research, Inc.
  4. Blomström, Magnus & Kokko, Ari, 1996. "Multinational Corporations and Spillovers," Working Paper Series in Economics and Finance 99, Stockholm School of Economics.
  5. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
  6. Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2005. "Foreign Direct Investment and the Domestic Capital Stock," American Economic Review, American Economic Association, vol. 95(2), pages 33-38, May.
  7. Hatzius, Jan, 2000. "Foreign direct investment and factor demand elasticities," European Economic Review, Elsevier, vol. 44(1), pages 117-143, January.
  8. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
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Citations

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Cited by:
  1. Julian Emami Namini & Enrico Pennings, 2009. "Horizontal Multinational Firms, Vertical Multinational Firms and Domestic Investment," Tinbergen Institute Discussion Papers 09-004/2, Tinbergen Institute.
  2. Julian Emami Namini & Enrico Pennings, 2009. "Horizontal Multinational Firms, Vertical Multinational Firms and Domestic Investment," Tinbergen Institute Discussion Papers 09-004/2, Tinbergen Institute.
  3. Herzer, Dierk & Vollmer, Sebastian, 2013. "Rising top incomes do not raise the tide," Journal of Policy Modeling, Elsevier, vol. 35(4), pages 504-519.
  4. Dierk Herzer, 2010. "The Long-Run Relationship between Outward FDI and Total Factor Productivity: Evidence for Developing Countries," Ibero America Institute for Econ. Research (IAI) Discussion Papers 199, Ibero-America Institute for Economic Research.
  5. Herzer, Dierk, 2013. "Cross-Country Heterogeneity and the Trade-Income Relationship," World Development, Elsevier, vol. 44(C), pages 194-211.
  6. Dierk Herzer & Peter Nunnenkamp, 2013. "Inward and outward FDI and income inequality: evidence from Europe," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 149(2), pages 395-422, June.

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