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Does outward foreign direct investment reduce domestic investment? Macro-evidence from Finland

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  • Pekka Sauramo

Abstract

Welfare state regimes have in recent decade come under increasing interest. From the point of economic analysis welfare state has been attacked due to increased welfare state expenditures or due to their expected negative consequences on economic performance. Recently, the economic performance of four different welfare state regimes has been analysed in the context of European Integration. It has turned out that so called Nordic model of welfare state has been successful in overcoming the trade off between equality and efficiency. However, in several Nordic countries income inequality has increased and such a development can have negative consequences on the performance of the Nordic model of welfare state.

Suggested Citation

  • Pekka Sauramo, 2008. "Does outward foreign direct investment reduce domestic investment? Macro-evidence from Finland," Working Papers 239, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    • Handle: RePEc:pst:wpaper:239
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    References listed on IDEAS

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    1. Martin S. Feldstein, 1995. "The Effects of Outbound Foreign Direct Investment on the Domestic Capital Stock," NBER Chapters, in: The Effects of Taxation on Multinational Corporations, pages 43-66, National Bureau of Economic Research, Inc.
    2. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    3. Dierk Herzer & Mechthild Schrooten, 2007. "Outward FDI and Domestic Investment," Discussion Papers of DIW Berlin 679, DIW Berlin, German Institute for Economic Research.
    4. Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2005. "Foreign Direct Investment and Domestic Economic Activity," NBER Working Papers 11717, National Bureau of Economic Research, Inc.
    5. Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2005. "Foreign Direct Investment and the Domestic Capital Stock," American Economic Review, American Economic Association, vol. 95(2), pages 33-38, May.
    6. Palle S. Andersen & P. Hainaut, 1998. "Foreign direct investment and employment in the industrial countries," BIS Working Papers 61, Bank for International Settlements.
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    Cited by:

    1. Maha Mohamed Alsebai Mohamed & Pingfeng Liu & Guihua Nie, 2021. "Are Technological Innovation and Foreign Direct Investment a Way to Boost Economic Growth? An Egyptian Case Study Using the Autoregressive Distributed Lag (ARDL) Model," Sustainability, MDPI, vol. 13(6), pages 1-28, March.
    2. Abdelhafidh Dhrifi, 2015. "Foreign direct investment, technological innovation and economic growth: empirical evidence using simultaneous equations model," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(4), pages 381-400, December.
    3. Jussi Ahokas, 2011. "A comprehensive view of regional economic development in Finland," ERSA conference papers ersa10p469, European Regional Science Association.
    4. Markku Lehmus, 2009. "Labour Taxation and Employment: An Analysis with a Macroeconomic Model for the Finnish Economy," Working Papers 249, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    5. Jaakko Kiander & Pekka Sauramo & Hannu Tanninen, 2009. "The Finnish incomes policy as corporatist political exchange: development of social capital and the social wage," Working Papers 256, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    6. Safet Kurtović & Nehat Maxhuni & Blerim Halili & Bujar Krasniqi, 2022. "Does outward foreign direct investment crowd in or crowd out domestic investment in central, east and southeast europe countries? an asymmetric approach," Economic Change and Restructuring, Springer, vol. 55(3), pages 1419-1444, August.
    7. Jaakko Kiander & Pekka Sauramo & Hannu Tanninen, 2011. "Finnish incomes policy as corporatist political exchange: development of social capital and the social wage," Transfer: European Review of Labour and Research, , vol. 17(4), pages 515-531, November.
    8. Mr. Ali J Al-Sadiq, 2013. "Outward Foreign Direct Investment and Domestic Investment: The Case of Developing Countries," IMF Working Papers 2013/052, International Monetary Fund.

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    More about this item

    Keywords

    outward foreign direct investment; domestic investment; domestic saving;
    All these keywords.

    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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