Domestic Investment And Fdi In Developing Countries: The Missing Link
AbstractThis paper investigates the impact of domestic investment on Foreign Direct Investment (FDI) to Developing Countries (DC). While the literature has provided numerous studies on the effects of FDI on growth and investment in host-country, very little is known about how domestic investment itself affects FDI inflows. The paper attempted to fill this gap. Evidence from a large cross-country sample (68 countries), over a long time period (1984-2004), shows that lagged domestic investment has a strong influence on FDI inflows in the host-economy, implying that domestic investment is a strong catalyst for FDI in DC and that Multinational Companies do follow economic development. This result suggests that investment promotion policies directed towards domestic firms will be efficient to attract foreign investors as well.
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.
Bibliographic InfoArticle provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.
Volume (Year): 37 (2012)
Issue (Month): 3 (September)
Foreign Direct Investment; Developing Countries; Domestic Investment; Industrial Policy;
Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O25 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
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.:
- Peter Nunnenkamp, 2002.
"Determinants of FDI in Developing Countries: Has Globalization Changed the Rules of the Game?,"
Kiel Working Papers
1122, Kiel Institute for the World Economy.
- Nunnenkamp, Peter & Spatz, Julius, 2002. "Determinants of FDI in Developing Countries: Has Globalization Changed the Rules of the Game?," Open Access Publications from Kiel Institute for the World Economy 2976, Kiel Institute for the World Economy (IfW).
- Sufian Eltayeb Mohamed & Moise G. Sidiropoulos, 2010. "Another Look At The Determinants Of Foreign Direct Investment In Mena Countries: An Empirical Investigation," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(2), pages 75-95, June.
- Moosa, Imad A. & Cardak, Buly A., 2006.
"The determinants of foreign direct investment: An extreme bounds analysis,"
Journal of Multinational Financial Management,
Elsevier, vol. 16(2), pages 199-211, April.
- Imad A Moosa & Buly A Cardak, 2003. "The Determinants of Foreign Direct Investment: An Extreme Bounds Analysis," Working Papers 2003.02, School of Economics, La Trobe University.
- James R. Markusen & Anthony J. Venables, 1997.
"Foreign Direct Investment as a Catalyst for Industrial Development,"
NBER Working Papers
6241, National Bureau of Economic Research, Inc.
- Markusen, James R. & Venables, Anthony J., 1999. "Foreign direct investment as a catalyst for industrial development," European Economic Review, Elsevier, vol. 43(2), pages 335-356, February.
- Adugna Lemi, 2004. "Foreign Direct Investment, Host Country Productivity And Export: The Case Of U.S. And Japanese Multinational Affiliates," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 29(1), pages 163-187, June.
- Peter Nunnenkamp, Julius Spatz, 2003. "Foreign Direct Investment and Economic Growth in Developing Countries: How Relevant Are Host-country and Industry Characteristics?," Kiel Working Papers 1176, Kiel Institute for the World Economy.
- David W Loree & Stephen E Guisinger, 1995. "Policy and Non-Policy Determinants of U.S. Equity Foreign Direct Investment," Journal of International Business Studies, Palgrave Macmillan, vol. 26(2), pages 281-299, June.
- Ali F. Darrat & Jayanta Sarkar, 2009. "Growth Consequences Of Foreign Direct Investment: Some Results For Turkey," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 34(2), pages 85-96, December.
- Ann Harrison & Ana Revenga, 1995. "The Effects of Trade Policy Reform: What Do We Really Know?," NBER Working Papers 5225, National Bureau of Economic Research, Inc.
- Léonce Ndikumana & Sher Verick, 2007. "The Linkages between FDI and Domestic Investment: Unravelling the Developmental Impact of Foreign Investment," UMASS Amherst Economics Working Papers 2007-13, University of Massachusetts Amherst, Department of Economics.
- Ndikumana, Leonce & Verick, Sher, 2008.
"The Linkages between FDI and Domestic Investment: Unravelling the Developmental Impact of Foreign Investment in Sub-Saharan Africa,"
IZA Discussion Papers
3296, Institute for the Study of Labor (IZA).
- Léonce Ndikumana & Sher Verick, 2008. "The Linkages Between FDI and Domestic Investment: Unravelling the Developmental Impact of Foreign Investment in Sub-Saharan Africa," Development Policy Review, Overseas Development Institute, vol. 26(6), pages 713-726, November.
- Manuel R. AGOSIN & Ricardo MAYER, 2000.
"Foreign Investment In Developing Countries, Does It Crowd In Domestic Investment?,"
UNCTAD Discussion Papers
146, United Nations Conference on Trade and Development.
- Manuel Agosin & Roberto Machado, 2005. "Foreign Investment in Developing Countries: Does it Crowd in Domestic Investment?," Oxford Development Studies, Taylor & Francis Journals, vol. 33(2), pages 149-162.
- Sandrine Levasseur, 2002. "Investissements directs à l'étranger et stratégies des entreprises multinationales," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(5), pages 103-152.
- Findlay, Ronald, 1978. "Relative Backwardness, Direct Foreign Investment, and the Transfer of Technology: A Simple Dynamic Model," The Quarterly Journal of Economics, MIT Press, vol. 92(1), pages 1-16, February.
- Li, Xiaoying & Liu, Xiaming, 2005. "Foreign Direct Investment and Economic Growth: An Increasingly Endogenous Relationship," World Development, Elsevier, vol. 33(3), pages 393-407, March.
- Md. Sharif Hossain & Rajarshi Mitra, 2013. "A Dynamic Panel Analysis of the Determinants of FDI in Africa," Economics Bulletin, AccessEcon, vol. 33(2), pages 1606-1614.
- Kamal A. El-Wassal, 2012. "Foreign Direct Investment And Economic Growth In Arab Countries (1970-2008): An Inquiry Into Determinants Of Growth Benefits," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 37(4), pages 79-100, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Changhui Kang).
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.