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FDI and Domestic Investment: An Industry-Level View

Author

Listed:
  • Arndt Christian

    (University of Nürtingen)

  • Buch Claudia M

    (Universität Tübingen)

  • Schnitzer Monika E

    (University of Munich)

Abstract

Previous empirical work on the link between domestic and foreign investment has provided mixed results. This may partly be due to the level of aggregation of the data. In this paper, we argue that the impact of FDI on the domestic capital stock depends on the structure of industries. Using industry-level data on the stock of German FDI, we test our predictions. We use panel cointegration methods which address the potential endogeneity of FDI. We find evidence for a positive long-run impact of FDI on the domestic capital stock.

Suggested Citation

  • Arndt Christian & Buch Claudia M & Schnitzer Monika E, 2010. "FDI and Domestic Investment: An Industry-Level View," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-22, July.
    • Handle: RePEc:bpj:bejeap:v:10:y:2010:i:1:n:69
    DOI: 10.2202/1935-1682.2295
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    More about this item

    Keywords

    foreign direct investment; domestic capital stock; domestic investment;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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