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Does FDI crowd out domestic investment in transition countries?

Author

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  • Cristina Jude

    (LEO - Laboratoire d'Économie d'Orleans [FRE2014] - UO - Université d'Orléans - UT - Université de Tours - CNRS - Centre National de la Recherche Scientifique)

Abstract

The aim of this paper is to empirically investigate the relationship between foreign direct investment (FDI) and domestic investment in a sample of 10 Central and Eastern European countries over the period 1995–2015. We find FDI to lead to a creative destruction phenomenon, with a short‐term crowding out effect on domestic investment, followed by a long‐term crowding in. Greenfield FDI develops stronger long‐run complementarities with domestic investment, while mergers and acquisitions do not show a significant effect on domestic investment. Financial development seems to mitigate crowding out pressures and even foster a crowding in for mergers and acquisitions.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Cristina Jude, 2019. "Does FDI crowd out domestic investment in transition countries?," Post-Print hal-03557775, HAL.
    • Handle: RePEc:hal:journl:hal-03557775
    DOI: 10.1111/ecot.12184
    as

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    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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