Can a home country benefit from FDI? A theoretical analysis
The effects of outward FDI on home country’s growth remain an open question. The growth of outward FDI has renewed this attention. By allowing for endogenous decisions of firms on both whether to conduct FDI and whether to flow capital returns back to the home country, we have found several interesting results. First, as long as the probability of conducting FDI is positive, a higher proportion of entrepreneurs may harm economic growth of the home country in short-run and long-run. The ambiguous effects of transaction costs and MRS between domestic and foreign consumption on the home country’s economic growth result from the role of financial intermediaries. If the effect via inflow probability dominates, conducting FDI in a host country with a more liberalized capital account, or with a higher capital return rate may promote the home country’s economic growth rate. This is consistent with the findings in the outward FDI in European Union since 1970s.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Postal: Alice Fong, Administrator, School of Economics and Finance, Victoria Business School, Victoria University of Wellington, PO Box 600 Wellington, New Zealand|
Phone: +64 (4) 463-5353
Fax: +64 (4) 463-5014
Web page: http://www.victoria.ac.nz/sef
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bruno Van Pottelsberghe De La Potterie & Frank Lichtenberg, 2001.
"Does Foreign Direct Investment Transfer Technology Across Borders?,"
The Review of Economics and Statistics,
MIT Press, vol. 83(3), pages 490-497, August.
- Bruno Van Pottelsberghe & Frank Lichtenberg, 2001. "Does foreign direct investment transfer technology across borders?," ULB Institutional Repository 2013/6221, ULB -- Universite Libre de Bruxelles.
- Stacey L. Schreft & Bruce D. Smith, 1994.
"Money, banking, and capital formation,"
94-05, Federal Reserve Bank of Richmond.
- Magnus Blomstrom & Ari Kokko, 2003.
"The Economics of Foreign Direct Investment Incentives,"
NBER Working Papers
9489, National Bureau of Economic Research, Inc.
- Blomström, Magnus & Kokko, Ari, 2003. "The Economics of Foreign Direct Investment Incentives," EIJS Working Paper Series 168, The European Institute of Japanese Studies.
- Blomström, Magnus & Kokko, Ari, 2003. "The Economics of Foreign Direct Investment Incentives," CEPR Discussion Papers 3775, C.E.P.R. Discussion Papers.
- Riess, Armin & Uppenberg, Kristian, 2004. "The internationalisation of production: moving plants, products, and people," EIB Papers 1/2004, European Investment Bank, Economics Department.
- Magnus Blomstrom & Ari Kokko, 1994.
"Home Country Effects of Foreign Direct Investment: Evidence from Sweden,"
NBER Working Papers
4639, National Bureau of Economic Research, Inc.
- Blomström, Magnus & Kokko, Ari, 1994. "Home Country Effects of Foreign Direct Investment: Evidence from Sweden," SSE/EFI Working Paper Series in Economics and Finance 3, Stockholm School of Economics.
- Blomström, Magnus & Kokko, Ari, 1994. "Home Country Effects of Foreign Direct Investment: Evidence from Sweden," CEPR Discussion Papers 931, C.E.P.R. Discussion Papers.
- Bruce Champ & Bruce D. Smith & Stephen D. Williamson, 1996.
"Currency Elasticity and Banking Panics: Theory and Evidence,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 29(4), pages 828-64, November.
- Champ, B. & Smith, B.D., 1991. "Currency Elasticity and Banking Panics: theory and Evidence," University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers 9109, University of Western Ontario, The Centre for the Study of International Economic Relations.
- Champ, B. & Snith, B.D. & Williamson, D.S., 1991. "Currency Elasticity and Banking Panics: Theory and Evidence," RCER Working Papers 292, University of Rochester - Center for Economic Research (RCER).
- Obstfeld,Maurice & Taylor,Alan M., 2004.
"Global Capital Markets,"
Cambridge University Press, number 9780521633178, September.
- Barry Eichengreen, 2004. "Capital Flows and Crises," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550598, December.
When requesting a correction, please mention this item's handle: RePEc:vuw:vuwecf:2067. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Library Technology Services)
If references are entirely missing, you can add them using this form.