Foreign Direct Investment, Competition and Industry Performance

Jürgen Bitzer () and Holger Görg ()

Kiel Working Papers from Kiel Institute for the World Economy

Abstract: Abstract: This paper investigates the productivity effects of inward and outward foreign direct investment using industry and country level data for 17 OECD countries over the period 1973 to 2001. Controlling for national and international knowledge spillovers we argue that effects of FDI work through direct compositional effects as well as changing competition in the host country. Our results show that there are, on average, productivity benefits from inward FDI, although we can identify a number of countries which, on aggregate, do not appear to benefit in terms of productivity. On the other hand, a country’s stock of outward FDI is, on average, negatively related to productivity. However, again there is substantial heterogeneity in the effect across OECD countries

Keywords: Foreign direct investment; inward FDI; outward FDI; productivity; competition (search for similar items in EconPapers)
JEL-codes: F23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-eff and nep-knm
Date: 2008-04
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Journal Article: Foreign Direct Investment, Competition and Industry Performance (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:kie:kieliw:1416

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