Foreign Direct Investment and Domestic Entrepreneurship: Blessing or Curse?

Seçil Hülya Danakol (), Saul Estrin (), Paul Reynolds () and Utz Weitzel
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Seçil Hülya Danakol: Utrecht University
Saul Estrin: London School of Economics
Paul Reynolds: Aston University

No 7796, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper explores the effects of foreign direct investment, measured by mergers and acquisitions, on domestic entrepreneurial entry. We use a micro-panel of more than two thousand individuals disaggregated by industry in seventy countries including both developed and developing economies, 2000-2009. The theory yields ambiguous predictions about the relationship between FDI and entrepreneurship; positive spillovers via dissemination of technology or negative because of crowding out. Our empirical analysis is conducted at three levels of aggregation. We find the relationship between FDI and domestic entrepreneurship in aggregate and intra-industry to be negative. Policies need to consider how to counteract this effect.

Keywords: new firm entry; entrepreneurship; foreign direct investment; spillovers (search for similar items in EconPapers)
JEL-codes: F23 L26 M13 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2013-12
New Economics Papers: this item is included in nep-cse, nep-ent, nep-int and nep-sbm
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Citations: View citations in EconPapers (11)

Published - published as 'Foreign direct investment via M&A and domestic entrepreneurship: blessing or curse?' in: Small Business Economics, 2017, 48 (3), 599 - 612

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Related works:
Working Paper: Foreign Direct Investment and Domestic Entrepreneurship: Blessing or Curse? (2014)
Working Paper: Foreign Direct Investment and Domestic Entrepreneurship: Blessing or Curse? (2014)
Working Paper: Foreign direct investment and domestic entrepreneurship: blessing or curse? (2014)
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