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FDI and Domestic Investment: An Industry-Level View

Author

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  • Arndt, Christian
  • Buch, Claudia M.
  • Schnitzer, Monika

Abstract

Previous empirical work on the link between domestic and foreigninvestment has provided mixed results. This may partly be due to thelevel of aggregation of the data. In this paper, we argue that theimpact of FDI on the domestic capital stock depends on the structure ofindustries. Using industry-level data on the stock of German FDI, wetest our predictions. We use panel cointegration methods which addressthe potential endogeneity of FDI. We find evidence for a positivelong-run impact of FDI on the domestic capital stock.

Suggested Citation

  • Arndt, Christian & Buch, Claudia M. & Schnitzer, Monika, 2010. "FDI and Domestic Investment: An Industry-Level View," Munich Reprints in Economics 20186, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:20186
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    More about this item

    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
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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