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Outward FDI and the Investment Development Path of a Late-Industrialising Economy - Evidence from Ireland

  • Frank Barry

    (University College Dublin)

  • Holger Görg

    (University of Nottingham)

  • Andrew McDowell

    (Forfás)

The Investment Development Path (IDP) hypothesis holds that a country’s net outward direct investment position is systematically related to its level of economic development. Ireland is an interesting test case because of the importance of inward FDI over the last three decades, the country's rapid recent FDI-fuelled growth, and the recent increase in outward FDI by Irish-owned multinationals. We find empirical support for the IDP concept for the Irish case. Our sectoral analysis shows up important differences between Ireland's outward FDI and the bulk of FDI occurring in the world economy however. Ireland's outward FDI flows are as yet almost exclusively horizontal and they go largely into non-internationally-tradable manufacturing and services sectors. Also, the firmspecific assets of Irish multinationals lie neither in R&D nor in the type of product differentiation associated with high advertising expenditures.

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File URL: http://www.ucd.ie/economics/research/papers/2001/WP01.08.pdf
File Function: First version, 2001
Download Restriction: no

Paper provided by School Of Economics, University College Dublin in its series Working Papers with number 200108.

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Length: 24 pages
Date of creation: 13 Apr 2001
Date of revision:
Handle: RePEc:ucn:wpaper:200108
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  1. Magnus Blomstrom & Gunnar Fors & Robert E. Lipsey, 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," NBER Working Papers 6205, National Bureau of Economic Research, Inc.
  2. Holger Görg & Frances Ruane, 2000. "European Integration and Peripherality: Lessons from the Irish Experience," The World Economy, Wiley Blackwell, vol. 23(3), pages 405-421, 03.
  3. Blomstrom, Magnus & Kokko, Ari, 2000. "Outward Investment, Employment, and Wages in Swedish Multinationals," Oxford Review of Economic Policy, Oxford University Press, vol. 16(3), pages 76-89, Autumn.
  4. Globerman, Steven & Kokko, Ari & Sjoholm, Fredrik, 2000. "International Technology Diffusion: Evidence from Swedish Patent Data," Kyklos, Wiley Blackwell, vol. 53(1), pages 17-38.
  5. Barry, F & Bradley, J, 1997. ""FDI and Trade : The Irish Host-Country Experience"," Papers 97/13, College Dublin, Department of Political Economy-.
  6. John Dunning, 1981. "Explaining the international direct investment position of countries: Towards a dynamic or developmental approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 117(1), pages 30-64, March.
  7. Gorg, Holger & Strobl, Eric, 2002. "Multinational companies and indigenous development: An empirical analysis," European Economic Review, Elsevier, vol. 46(7), pages 1305-1322, July.
  8. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
  9. Mary O'Sullivan, 2000. "The sustainability of industrial development in Ireland," Regional Studies, Taylor & Francis Journals, vol. 34(3), pages 277-290.
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