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Outward FDI and Domestic Investment

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Author Info
Dierk Herzer
Mechthild Schrooten

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Abstract

This paper examines the impact of outward foreign direct investment (OFDI) on domestic investment by applying co-integration techniques to macroeconomic time series data for the United Sates and Germany. We show that the two countries differ: In the case of the US, OFDI has positive long-run effects on domestic investment while in the case of Germany the reverse effect is reported.

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File URL: http://www.diw.de/documents/publikationen/73/55853/dp679.pdf
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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 679.

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Length: 14 p.
Date of creation: 2007
Date of revision:
Publication status: Published in: Economics Letters 99 (2008) Iss. 1, 139-143
Handle: RePEc:diw:diwwpp:dp679

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Related research
Keywords: Foreign Direct Investment Investment Open Economy Macroeconomics

Find related papers by JEL classification:
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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References listed on IDEAS
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.:
  1. 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. [Downloadable!] (restricted)
  2. Peter C.B. Phillips & Mico Loretan, 1989. "Estimating Long Run Economic Equilibria," Cowles Foundation Discussion Papers 928, Cowles Foundation, Yale University. [Downloadable!]
    Other versions:
  3. Martin Feldstein, 1994. "The Effects of Outbound Foreign Direct Investment on the Domestic Capital Stock," NBER Working Papers 4668, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. 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. [Downloadable!]
  5. René Belderbos, 1992. "Large multinational enterprises based in a small economy: Effects on domestic investment," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 127(3), pages 543-557, September. [Downloadable!] (restricted)
  6. Robert E. Lipsey & Guy V.G. Stevens, 1992. "Interactions between Domestic and Foreign Investment," NBER Working Papers 2714, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211. [Downloadable!] (restricted)
  8. Mihir C. Desai & C. Fritz Foley & James R. Hines Jr., 2005. "Foreign Direct Investment and the Domestic Capital Stock," NBER Working Papers 11075, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Christian Arndt & Claudia M. Buch & Monika Schnitzer, 2007. "FDI and Domestic Investment: An Industry-Level View," Discussion Papers 212, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
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