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Public Procurement and Foreign Direct Investment Across France, Germany, Italy and the UK

Author

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  • Dimitri Mardas
  • George Papachristou
  • Nikos Varsakelis

Abstract

Foreign direct investment (FDI) has become an important factor of economic development during the last decades. FDI contributes to the economic growth of the host economy through learning, diffusion of technology, positive externalities and capital inflows. Attracting FDI is currently an objective in its own right for many countries and this paper aims to identify policies affecting the multinational firm’s decision to establish a subsidiary. After accounting for labour productivity and trade openness, cross-section analysis, both industry-wise and country-wise, indicates that public procurement, especially “buy national” policies, and agglomeration economies are statistically significant determinants of FDI. Although our findings pertain to four large European economies, e.g. France, Germany, Italy and the UK, they constitute relevant policy guidelines for developing countries as well. Copyright International Atlantic Economic Society 2008

Suggested Citation

  • Dimitri Mardas & George Papachristou & Nikos Varsakelis, 2008. "Public Procurement and Foreign Direct Investment Across France, Germany, Italy and the UK," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 36(2), pages 183-193, June.
    • Handle: RePEc:kap:atlecj:v:36:y:2008:i:2:p:183-193
    DOI: 10.1007/s11293-007-9105-7
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    References listed on IDEAS

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    Cited by:

    1. Gulnara Gafurova & Svetlana Fookina & Galina Notfullina, 2016. "Public Procurement as an Instrument for the Development of Small and Medium-Sized Business in Russia," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(4), pages 1233-1243.
    2. Gafurova, G. T. & Notfullina, G. N. & Fukina, S. P., 2016. "Government Procurements as a Tool for the Development of Small and Medium Business in Russia," R-Economy, Ural Federal University, Graduate School of Economics and Management, vol. 2(4), pages 500-508.

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    More about this item

    Keywords

    Foreign direct investment; Public procurement; Agglomeration effect; Industrial policy; H57; F21; L52;
    All these keywords.

    JEL classification:

    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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