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Outward FDI and the Investment Development Path of a Late-industrializing Economy: Evidence from Ireland

Listed author(s):
  • Frank Barry
  • Holger Gorg
  • Andrew Mcdowell

B ARRY F., G oRG H. and M CDOWELL A. (2003) Outward FDI and the investment development path of a late-industrializing economy: evidence from Ireland, Reg. Studies 37 , 341-349. The Investment Development Path (IDP) hypothesis holds that a country's net outward direct investment position is systematically related to its level of economic development. Ireland is an interesting test case because of the importance of inward foreign direct investment (FDI) over the last three decades and the recent increase in outward FDI by Irish-owned multinationals. We find empirical support for the IDP concept for the Irish case. Our sectoral analysis suggests that Ireland's outward FDI flows are disproportionately horizontal and oriented towards non-internationally-tradable sectors. Also, the firm-specific assets of Irish multinationals lie neither in R&D nor in the type of product differentiation associated with high advertising expenditures. B ARRY F., G oRG H. et M CDOWELL A. (2003) L'investissement direct a l'etranger et le sentier de developpement de l'investissement dans une economie venue tard a l'industrialisation: etude de cas de l'Irlande, Reg. Studies 37 , 341-349. L'hypothese a propos du sentier de developpement de l'investissement stipule que l'importance relative de l'investissement direct net a l'etranger d'un pays se rapporte syste matiquement a son niveau de developpement economique. L'Irlande constitue une etude de cas interessante vu l' importance de l'investissement direct etranger pendant les trois dernieres decennies et donne l'augmentation recente de l'investissement direct a l'etranger des multinationales a capital irlandais. Le cas d'etude irlandais vient a l' appui de la notion d'un sentier de developpement de l'investissement. L'analyse sectorielle laisse supposer que les flux d'investissement irlandais a l'etranger sont d'une facon disproportionnee horizontaux et sont orientes vers des secteurs non-commercialisables sur le plan international. En plus, les actifs des multinationales irlandaises specifiques a une entreprise ne sont ni dans la R et D, ni dans la differenciation du produit associee aux grosses depenses de publicite. B ARRY F., G oRG H. und M CDOWELL A. (2003) Nach aussen gerichtete Investierungen im Ausland (Foreign Direct Investment (FDI)) und der Weg der Investierungsentwicklung einer spat zur Industrialisierung findenden Wirtschaft: Beweise aus Irland, Reg. Studies , 37 , 341-349. Die Hypothese des Weges der Investierungsentwicklung (Investment Development Path=IDP) vertritt die Auffassung, dass die nach aussen gerichtete netto Investierungslage eines Landes systematisch mit dem Niveau seiner Wirtschaftsentwicklung verbunden ist. Irland ist ein interessanter Musterfall wegen der Bedeutung, der in den letzten drei Jahrzehnten nach innen gerichteten Investierungen im Ausland beigemessen wurden, und wegen der neuerlichen Zunahme nach aussen gerichteter Investierungen im Ausland durch in irischem Besitz befindliche multinationale Firmen. Die Autoren stellen fest, dass im Fall Irlands das Konzept des Investierungs- entwicklungsweges empirisch untermauert ist. Ihre Sektorenanalyse deutet darauf hin, dass nach aussen gerichtete Flusse von Investierungen im Ausland unverhaltnismassig horizontal verlaufen, und auf international nicht handelbare Faktoren ausgerichtet sind. Ausserdem befinden die firmenspezifischen Vermogenswerte irischer multinationaler Firmen sich weder in Forschung und Entwicklung, noch in der Art der Produktdifferenzierung, die man mit hohen Werbeausgaben in Verbindung bringt.

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Article provided by Taylor & Francis Journals in its journal Regional Studies.

Volume (Year): 37 (2003)
Issue (Month): 4 ()
Pages: 341-349

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Handle: RePEc:taf:regstd:v:37:y:2003:i:4:p:341-349
DOI: 10.1080/0034340032000074389
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References listed on IDEAS
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  1. Blomstrom, Magnus & Fors, Gunnar & Lipsey, Robert E, 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," Economic Journal, Royal Economic Society, vol. 107(445), pages 1787-1797, November.
  2. Barry, Frank & Bradley, John, 1997. "FDI and Trade: The Irish Host-Country Experience," Economic Journal, Royal Economic Society, vol. 107(445), pages 1798-1811, November.
  3. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
  4. Gorg, Holger & Strobl, Eric, 2002. "Multinational companies and indigenous development: An empirical analysis," European Economic Review, Elsevier, vol. 46(7), pages 1305-1322, July.
  5. John Dunning, 1981. "Explaining the international direct investment position of countries: Towards a dynamic or developmental approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 117(1), pages 30-64, March.
  6. Blomstrom, Magnus & Kokko, Ari, 2000. "Outward Investment, Employment, and Wages in Swedish Multinationals," Oxford Review of Economic Policy, Oxford University Press, vol. 16(3), pages 76-89, Autumn.
  7. Globerman, Steven & Kokko, Ari & Sjoholm, Fredrik, 2000. "International Technology Diffusion: Evidence from Swedish Patent Data," Kyklos, Wiley Blackwell, vol. 53(1), pages 17-38.
  8. repec:hhs:iuiwop:490 is not listed on IDEAS
  9. Mary O'Sullivan, 2000. "The sustainability of industrial development in Ireland," Regional Studies, Taylor & Francis Journals, vol. 34(3), pages 277-290.
  10. Holger Görg & Frances Ruane, 2000. "European Integration and Peripherality: Lessons from the Irish Experience," The World Economy, Wiley Blackwell, vol. 23(3), pages 405-421, March.
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