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Does FDI crowd out domestic investment in transition countries?

Cristina Jude ()

Working papers from Banque de France

Abstract: The aim of this paper is to empirically investigate the relationship between 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.

Keywords: investment; FDI; crowding-out; economic transition; financial development. (search for similar items in EconPapers)
JEL-codes: E22 F21 F43 O52 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2018
New Economics Papers: this item is included in nep-eur, nep-fdg, nep-int, nep-mac and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

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Related works:
Journal Article: Does FDI crowd out domestic investment in transition countries? (2019) 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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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:695

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