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Does FDI crowd out domestic investment in transition countries?

Cristina Jude ()

The Economics of Transition, 2019, vol. 27, issue 1, 163-200

Abstract: The aim of this paper is to empirically investigate the relationship between foreign direct investment (FDI) and domestic investment in a sample of 10 Central and Eastern European countries over the period 1995–2015. We find FDI to lead to a creative destruction phenomenon, with a short‐term crowding out effect on domestic investment, followed by a long‐term crowding in. Greenfield FDI develops stronger long‐run complementarities with domestic investment, while mergers and acquisitions do not show a significant effect on domestic investment. Financial development seems to mitigate crowding out pressures and even foster a crowding in for mergers and acquisitions.

Date: 2019
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https://doi.org/10.1111/ecot.12184

Related works:
Working Paper: Does FDI crowd out domestic investment in transition countries? (2018) Downloads
Working Paper: Does FDI Crowd out Domestic Investment in Transition Countries? (2015) Downloads
Working Paper: Does FDI Crowd out Domestic Investment in Transition Countries? (2015) Downloads
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