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FDI and domestic investment in Germany: crowding in or out?

Author

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  • Özlem Onaran
  • Engelbert Stockhammer
  • Klara Zwickl

Abstract

This paper estimates the effects of outward FDI on domestic business investment in Germany at the industry level for a panel of 19 industry and 10 services sectors. We pay particular attention to the different motivations behind FDI, and distinguish between FDI to high-versus low-wage countries, to Europe versus the rest of the world, and FDI in services and industry sectors.We find that, in industry, FDI to low-wage countries crowds out domestic investment, whereas FDI to high-wage countries outside Europe crowds in domestic investment. In services, FDI to Western Europe crowds in domestic investment.

Suggested Citation

  • Özlem Onaran & Engelbert Stockhammer & Klara Zwickl, 2013. "FDI and domestic investment in Germany: crowding in or out?," International Review of Applied Economics, Taylor & Francis Journals, vol. 27(4), pages 429-448, July.
    • Handle: RePEc:taf:irapec:v:27:y:2013:i:4:p:429-448
    DOI: 10.1080/02692171.2012.752444
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    References listed on IDEAS

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    1. Blomström, Magnus & Kokko, Ari, 1994. "Home Country Effects of Foreign Direct Investment: Evidence from Sweden," SSE/EFI Working Paper Series in Economics and Finance 3, Stockholm School of Economics.
    2. Laura Hering & Tomohiko Inui & Sandra Poncet, 2010. "The Elusive Impact of Investing Abroad for Japanese Parent Firms: Can Disaggregation According to FDI Motives Help?," Working Papers 2010-01, CEPII research center.
    3. Hui‐lin LIN & Wen‐Bin CHUANG, 2007. "Fdi And Domestic Investment In Taiwan: An Endogenous Switching Model," The Developing Economies, Institute of Developing Economies, vol. 45(4), pages 465-490, December.
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    Cited by:

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    7. Padmaja M, 2023. "Does outward foreign direct investment crowd out domestic investment in India?," Economics Bulletin, AccessEcon, vol. 43(1), pages 526-536.

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