Should Governments Support Outward FDI? The Case of Poland

Marian Gorynia, Jan Nowak, Piotr Trapczyński and Radosław Wolniak

Chapter 6 in Institutional Impacts on Firm Internationalization, 2015, pp 120-145 from Palgrave Macmillan

Abstract: Abstract Policy discussions in extant literature have been disproportionately centred around government support for inward foreign direct investment as compared to outward foreign direct investment (Solis, 2003; Te Velde, 2007; Buckley et al., 2010; Globerman and Chen, 2010). This apparently corresponds to the fact that the economic impacts of inward FDI have been widely discussed, while the economic impacts of outward FDI are far less understood, as the subsequent sections of this chapter illustrate. While there is no unanimous empirical support for a positive or negative impact of outward FDI on home economies (Globerman and Shapiro, 2008) and the impact of an increased internationalization degree has only an ambiguous influence on the economic performance of transnational corporations (TNCs) (Matysiak and Bausch, 2012), there is no universal basis for governments to promote or discourage outward FDI. Globerman and Shapiro (2008: 263) argue that ‘higher profits realized by owners of home-country TNCs do not justify public policies that subsidize or otherwise lower the costs of undertaking OFDI for home-country TNCs’, since such policies require efficiency improvement of the home economy, in the first place. However, they also argue that the linkages between outward FDI, globalization and the real income growth, which exist in developing countries, might not be as evident as in the case of developed countries.

Keywords: Foreign Direct Investment; Host Country; Home Country; Foreign Market; Domestic Investment (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1057/9781137446350_6

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