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

February 26, 2013

Preview Citation

Format: Chicago

Ali J Al-Sadiq. Outward Foreign Direct Investment and Domestic Investment: The Case of Developing Countries, (USA: International Monetary Fund, 2013) accessed September 18, 2024

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.

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

Keywords: Africa, Benchmark investment equation, Capital flows, Developing Countries, Domestic investment, Estimation techniques, FDI data, FDI inflow, FDI outflow, Financial sector development, Foreign Direct Investment, GMM, Outward FDI, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2013/052
Stock No:

WPIEA2013052
ISBN:

9781475517934
ISSN:

1018-5941

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