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Does FDI Crowd out Domestic Investment in Transition Countries?

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  • Cristina Jude

    () (Centre de recherche de la Banque de France - Banque de France, LEO - Laboratoire d'économie d'Orleans - UO - Université d'Orléans - CNRS - Centre National de la Recherche Scientifique)

Abstract

The aim of this paper is to empirically test the hypothesis of FDI led capital accumulation in Central and Eastern European countries. More precisely, we investigate the relationship between FDI and local investment, using a sample of 10 CEEC over the period 1990-2010. We find FDI to crowd out domestic investment, while the effect decreases with time. Our results also indicate that greenfield FDI may develop long run complementarities with domestic investment, while mergers and acquisitions do not prove any significant effect on domestic investment. Finally, financial development seems to foster a certain crowding-in effect in the case of mergers&acquisitions.

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  • Cristina Jude, 2015. "Does FDI Crowd out Domestic Investment in Transition Countries?," Working Papers halshs-01252565, HAL.
  • Handle: RePEc:hal:wpaper:halshs-01252565
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01252565
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    Keywords

    investment; FDI; crowding-out; economic transition; financial development;

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