Foreign Investment In Developing Countries, Does It Crowd In Domestic Investment?
AbstractThis paper assesses the extent to which foreign direct investment in developing countries crowds in or crowds out domestic investment. We develop a theoretical model of investment that includes an FDI variable and we proceed to test it with panel data for the period 1970–1996 and the two subperiods 1976–1985 and 1986–1996. The model is run for three developing regions (Africa, Asia and Latin America). One version of the model allows us to distinguish crowding in and crowding out effects for individual countries within each region. The results indicate that in Asia – but less so in Africa – there has been strong crowding in of domestic investment by FDI; by contrast, strong crowding out has been the norm in Latin America. The conclusion we reach is that the effects of FDI on domestic investment are by no means always favorable and that simplistic policies toward FDI are unlikely to be optimal.
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 InfoPaper provided by United Nations Conference on Trade and Development in its series UNCTAD Discussion Papers with number 146.
Date of creation: 2000
Date of revision:
Contact details of provider:
Postal: Palais des Nations, CH - 1211 Geneva 10
Phone: +41 22 907 12 34
Fax: +41 22 907 00 43
Web page: http://www.unctad.org/Templates/Page.asp?intItemID=2101&lang=1
More information through EDIRC
Other versions of this item:
- 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.
- NEP-AFR-2004-09-05 (Africa)
- NEP-ALL-2004-09-05 (All new papers)
- NEP-IFN-2004-09-05 (International Finance)
- NEP-LAM-2004-09-05 (Central & South America)
- NEP-MAC-2004-09-05 (Macroeconomics)
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.:
- Robert J. Barro, 1991.
"Economic Growth in a Cross Section of Countries,"
NBER Working Papers
3120, National Bureau of Economic Research, Inc.
- Rama, Martin, 1990. "Empirical investment equations in developing countries," Policy Research Working Paper Series 563, The World Bank.
- 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.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rachid Bouhia).
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.