KTH/CESIS Working Paper Series in Economics and Institutions of Innovation
The Relationship Between Domestic and Outward Foreign Investment Revisited: The Impact of Industry-Specific Effects
(), Lars Oxelheim and Per Thulin
Abstract: The ambiguity reported in previous research as regards the
effect of foreign direct investment (FDI) on domestic investments is shown
to be related to how industries are organized. Based on a simple model
including monitoring and trade costs, we argue that a complementary
relationship should prevail in vertically integrated industries, whereas a
substitutionary relationship can be expected in horizontally organized
production. Applying iterative SUR-technique, the empirical analysis
confirms a significant difference between the two categories of industries.
To our knowledge, this is the first attempt to reconcile the
inconclusiveness reported in previous empirical analyses.
Keywords: FDI; complementarities; substitutes; knowledge intensity; (follow links to similar papers)
JEL-Codes: F12; F21; F23; G34; (follow links to similar papers)
29 pages, August 12, 2005
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to Vardan Hovsepyan ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom