The relationship between domestic and outward foreign direct investment: The role of industry-specific effects

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Abstract

Previous research has been inconclusive as regards the effect of outward foreign direct investment (FDI) on domestic investments. In this article, we show that this inconclusiveness can be explained at a disaggregated level as a function of the way industries are organized. Based on a simple theoretical framework including monitoring and trade costs, we argue that a complementary relationship can be expected to prevail in vertically integrated industries, whereas a substitutionary relationship can be expected in horizontally organized production. The empirical analysis confirms a significant difference between the two categories of industry as regards the impact of outward FDI on domestic investment. The results may thus have profound policy implications. JEL no. F12, F21, F23, G34.

Detaljer

Författare
Enheter & grupper
Forskningsområden

Ämnesklassifikation (UKÄ) – OBLIGATORISK

  • Ekonomi och näringsliv
  • Företagsekonomi

Nyckelord

Originalspråkengelska
Sidor (från-till)677-694
TidskriftInternational Business Review
Volym14
Utgivningsnummer6
StatusPublished - 2005
PublikationskategoriForskning
Peer review utfördJa