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Response to ‘Institutions, Foreign Direct Investment, and Domestic Investment: Crowding Out or Crowding In?’

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  • Morrissey, Oliver
  • Udomkerdmongkol, Manop

Abstract

Farla, de Crombrugghe, and Verspagen (2016) raise two criticisms of Morrissey and Udomkerdmongkol (2012): that a more appropriate instrumentation strategy eliminates the significance of the effect of governance, and the finding that FDI crowds out private investment is reversed using their preferred dependent variable. This response accepts the first point as they do demonstrate the fragility of results for governance, but rejects the second point as they do not actually provide evidence of crowding in.

Suggested Citation

  • Morrissey, Oliver & Udomkerdmongkol, Manop, 2016. "Response to ‘Institutions, Foreign Direct Investment, and Domestic Investment: Crowding Out or Crowding In?’," World Development, Elsevier, vol. 88(C), pages 10-11.
    • Handle: RePEc:eee:wdevel:v:88:y:2016:i:c:p:10-11
    DOI: 10.1016/j.worlddev.2016.08.001
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    References listed on IDEAS

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    1. Morrissey, Oliver & Udomkerdmongkol, Manop, 2012. "Governance, Private Investment and Foreign Direct Investment in Developing Countries," World Development, Elsevier, vol. 40(3), pages 437-445.
    2. Bruce Blonigen, 2005. "A Review of the Empirical Literature on FDI Determinants," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 33(4), pages 383-403, December.
    3. Farla, Kristine & de Crombrugghe, Denis & Verspagen, Bart, 2016. "Institutions, Foreign Direct Investment, and Domestic Investment: Crowding Out or Crowding In?," World Development, Elsevier, vol. 88(C), pages 1-9.
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    Cited by:

    1. Eslamloueyan, Karim & Jafari, Mahboubeh, 2019. "Do better institutions offset the adverse effect of a financial crisis on investment? Evidence from East Asia," Economic Modelling, Elsevier, vol. 79(C), pages 154-172.
    2. Leonce Ndikumana & Mare Sarr, 2019. "Capital Flight, Foreign Direct Investment and Natural Resources in Africa," UMASS Amherst Economics Working Papers 2019-12, University of Massachusetts Amherst, Department of Economics.
    3. Ha, Van & Holmes, Mark J. & Tran, Tuyen Quang, 2022. "Does foreign investment crowd in domestic investment? Evidence from Vietnam," International Economics, Elsevier, vol. 171(C), pages 18-29.
    4. Ndikumana, Léonce & Sarr, Mare, 2019. "Capital flight, foreign direct investment and natural resources in Africa," Resources Policy, Elsevier, vol. 63(C), pages 1-1.
    5. Alessia A. Amighini & Margaret S. McMillan & Marco Sanfilippo, 2017. "FDI and Capital Formation in Developing Economies: New Evidence from Industry-level Data," NBER Working Papers 23049, National Bureau of Economic Research, Inc.

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