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Outward foreign direct investment and domestic performance: In search of a causal link

Emmanuel Dhyne () and Selen Sarisoy Guerin ()
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Selen Sarisoy Guerin: Corresponding author, Trinity College Dublin

No 272, Working Paper Research from National Bank of Belgium

Abstract: The aim of this paper is to examine causal effects of outward foreign direct investment activities of corporations that start expanding abroad on a large number of domestic performance indicators. Our results indicate that there is no evidence in our data to show that FDI has statistically significant impact on productivity, employment and output. The only statistically significant result indicates that FDI causes positive growth in export intensity. On the other hand when we restrict our sample to Belgian manufacturing firms only, we do find that switching to OFDI causes a positive growth in TFP. This effect is coupled with an increase in wages and exports. On the other hand, we do not find any statistically significant evidence that internationalization of Belgian firms causes loss of employment for the unskilled worker as in other studies

Keywords: multinational firms; propensity score matching, difference-in-differences (search for similar items in EconPapers)
JEL-codes: F23 D21 C14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff and nep-int
Date: 2014-10
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Handle: RePEc:nbb:reswpp:201410-272