Outward Foreign Direct Investment and Domestic Investment: The Case of Developing Countries

Author/Editor:

Ali J Al-Sadiq

Publication Date:

February 26, 2013

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Over the past two decades, the growth rate of outward foreign direct investment (FDI) from developing and transition economies has increased significantly. Given the role of physical capital accumulation in determining the economic growth rate, it is important to assess how domestic investment responds to such outflows. This study empirically examines the effects of outward FDI on domestic investment in developing countries. Using data from 121 developing and transition economies over the period 1990–2010, the results suggest that FDI outflows negatively impact the rate of domestic investment.

Series:

Working Paper No. 2013/052

Subject:

Balance of payments Capital flows Econometric analysis Estimation techniques Financial markets Financial sector development Foreign direct investment

English

Publication Date:

February 26, 2013

ISBN/ISSN:

9781475517934/1018-5941

Stock No:

WPIEA2013052

Pages:

28

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