Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81263
Authors: 
Braunerhjelm, Pontus
Oxelheim, Lars
Thulin, Per
Year of Publication: 
2004
Series/Report no.: 
IUI Working Paper 625
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 model 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.
Subjects: 
FDI
Gross Domestic Investment
Industry-Specific Effects
Monitoring Costs
Trade Costs
JEL: 
F12
F21
F23
G34
Document Type: 
Working Paper

Files in This Item:
File
Size
103.93 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.