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Foreign Direct Investment in a Late Industrialising Country: The Portuguese IDP Revisited


  • Francisco B. Castro

    (CEMPRE, Faculdade de Economia da Universidade do Porto)


This article uses the investment development path to analyse the evolution of Portugal’s competitiveness in recent years. This is interpreted as the country’s capacity to both attract and engage in foreign direct investment. The estimation of the Portuguese IDP confirms previous claims that Portugal has joined other late industrialising countries as a 'stage 4' country, but that this position may not be consolidated. Outward FDI, albeit limited in terms of the number of firms and destinations, seems to show most characteristics expected at this stage of development. However, the fading of export-oriented inward FDI during the 1990s represents a danger in a country where FDI has been critical for market access and industrial diversification despite a much smaller weight in the economy than in other OECD countries.

Suggested Citation

  • Francisco B. Castro, 2004. "Foreign Direct Investment in a Late Industrialising Country: The Portuguese IDP Revisited," FEP Working Papers 147, Universidade do Porto, Faculdade de Economia do Porto.
  • Handle: RePEc:por:fepwps:147

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    References listed on IDEAS

    1. repec:sae:niesru:v:160:y::i:1:p:100-111 is not listed on IDEAS
    2. 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.
    3. Gábor Hunya & Jan Stankovsky, 2004. "WIIW-WIFO Database. Foreign Direct Investment in Central and Eastern Europe with Special Attention to Austrian FDI Activities in this Region," WIFO Studies, WIFO, number 25150.
    4. Gabor Hunya, 2004. "Foreign Direct Investment in Central and Eastern Europe with Special Attention to Austrian FDI Activities in this Region," wiiw FDI Reports 2004-07, The Vienna Institute for International Economic Studies, wiiw.
    5. Jamuna Prasad Agarwal, 1997. "European Integration and German FDI: Implications for Domestic Investment and Central European Economies," National Institute Economic Review, National Institute of Economic and Social Research, vol. 160(1), pages 100-111, April.
    6. Gábor Hunya & Jan Stankovsky, 2004. "WIIW-WIFO Database. Foreign Direct Investment in Central and Eastern Europe with Special Attention to Austrian FDI Activities in this Region," WIFO Studies, WIFO, number 24846.
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    Cited by:

    1. Ana Paula Africano & Manuela Magalhaes, 2005. "FDI and Trade in Portugal: a gravity analysis," FEP Working Papers 174, Universidade do Porto, Faculdade de Economia do Porto.
    2. Teixeira, Aurora A.C. & Fortuna, Natércia, 2010. "Human capital, R&D, trade, and long-run productivity. Testing the technological absorption hypothesis for the Portuguese economy, 1960-2001," Research Policy, Elsevier, vol. 39(3), pages 335-350, April.
    3. Andrea Goldstein & Fazia Pusterla, 2008. "Emerging Economies’ Multinationals: General Features and Specificities of the Brazilian and Chinese Cases," KITeS Working Papers 223, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Oct 2008.

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    More about this item


    Investment Development Path; Inward FDI; Outward FDI; Portugal;
    All these keywords.

    JEL classification:

    • 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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