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Outward FDI and the Investment Development Path of a Late-industrializing Economy: Evidence from Ireland

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  • Frank Barry
  • Holger Gorg
  • Andrew Mcdowell

Abstract

B ARRY F., G oRG H. and M CDOWELL A. (2003) Outward FDI and the investment development path of a late-industrializing economy: evidence from Ireland, Reg. Studies 37 , 341-349. The Investment Development Path (IDP) hypothesis holds that a country's net outward direct investment position is systematically related to its level of economic development. Ireland is an interesting test case because of the importance of inward foreign direct investment (FDI) over the last three decades and the recent increase in outward FDI by Irish-owned multinationals. We find empirical support for the IDP concept for the Irish case. Our sectoral analysis suggests that Ireland's outward FDI flows are disproportionately horizontal and oriented towards non-internationally-tradable sectors. Also, the firm-specific assets of Irish multinationals lie neither in R&D nor in the type of product differentiation associated with high advertising expenditures. B ARRY F., G oRG H. et M CDOWELL A. (2003) L'investissement direct a l'etranger et le sentier de developpement de l'investissement dans une economie venue tard a l'industrialisation: etude de cas de l'Irlande, Reg. Studies 37 , 341-349. L'hypothese a propos du sentier de developpement de l'investissement stipule que l'importance relative de l'investissement direct net a l'etranger d'un pays se rapporte syste matiquement a son niveau de developpement economique. L'Irlande constitue une etude de cas interessante vu l' importance de l'investissement direct etranger pendant les trois dernieres decennies et donne l'augmentation recente de l'investissement direct a l'etranger des multinationales a capital irlandais. Le cas d'etude irlandais vient a l' appui de la notion d'un sentier de developpement de l'investissement. L'analyse sectorielle laisse supposer que les flux d'investissement irlandais a l'etranger sont d'une facon disproportionnee horizontaux et sont orientes vers des secteurs non-commercialisables sur le plan international. En plus, les actifs des multinationales irlandaises specifiques a une entreprise ne sont ni dans la R et D, ni dans la differenciation du produit associee aux grosses depenses de publicite. B ARRY F., G oRG H. und M CDOWELL A. (2003) Nach aussen gerichtete Investierungen im Ausland (Foreign Direct Investment (FDI)) und der Weg der Investierungsentwicklung einer spat zur Industrialisierung findenden Wirtschaft: Beweise aus Irland, Reg. Studies , 37 , 341-349. Die Hypothese des Weges der Investierungsentwicklung (Investment Development Path=IDP) vertritt die Auffassung, dass die nach aussen gerichtete netto Investierungslage eines Landes systematisch mit dem Niveau seiner Wirtschaftsentwicklung verbunden ist. Irland ist ein interessanter Musterfall wegen der Bedeutung, der in den letzten drei Jahrzehnten nach innen gerichteten Investierungen im Ausland beigemessen wurden, und wegen der neuerlichen Zunahme nach aussen gerichteter Investierungen im Ausland durch in irischem Besitz befindliche multinationale Firmen. Die Autoren stellen fest, dass im Fall Irlands das Konzept des Investierungs- entwicklungsweges empirisch untermauert ist. Ihre Sektorenanalyse deutet darauf hin, dass nach aussen gerichtete Flusse von Investierungen im Ausland unverhaltnismassig horizontal verlaufen, und auf international nicht handelbare Faktoren ausgerichtet sind. Ausserdem befinden die firmenspezifischen Vermogenswerte irischer multinationaler Firmen sich weder in Forschung und Entwicklung, noch in der Art der Produktdifferenzierung, die man mit hohen Werbeausgaben in Verbindung bringt.

Suggested Citation

  • Frank Barry & Holger Gorg & Andrew Mcdowell, 2003. "Outward FDI and the Investment Development Path of a Late-industrializing Economy: Evidence from Ireland," Regional Studies, Taylor & Francis Journals, vol. 37(4), pages 341-349.
    • Handle: RePEc:taf:regstd:v:37:y:2003:i:4:p:341-349
    DOI: 10.1080/0034340032000074389
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    2. Rishika Nayyar & Jaydeep Mukherjee, 2018. "Outward FDI from India: A macro level examination in the presence of structural breaks," Working Papers 1833, Indian Institute of Foreign Trade.
    3. Stoian, Carmen, 2013. "Extending Dunning's Investment Development Path: The role of home country institutional determinants in explaining outward foreign direct investment," International Business Review, Elsevier, vol. 22(3), pages 615-637.
    4. Yuandi Wang & Lutao Ning & Jian Li & Martha Prevezer, 2016. "Foreign Direct Investment Spillovers and the Geography of Innovation in Chinese Regions: The Role of Regional Industrial Specialization and Diversity," Regional Studies, Taylor & Francis Journals, vol. 50(5), pages 805-822, May.
    5. Maximilian Buchholz & Harald Bathelt & John A. Cantwell, 0. "Income divergence and global connectivity of U.S. urban regions," Journal of International Business Policy, Palgrave Macmillan, vol. 0, pages 1-20.
    6. Gnangnon, Sèna Kimm, 2018. "Effect of multilateral trade liberalization on foreign direct investment outflows amid structural economic vulnerability in developing countries," Research in International Business and Finance, Elsevier, vol. 45(C), pages 15-29.
    7. McDonnell, Anthony & Lamare, Ryan & Gunnigle, Patrick & Lavelle, Jonathan, 2010. "Developing tomorrow's leaders--Evidence of global talent management in multinational enterprises," Journal of World Business, Elsevier, vol. 45(2), pages 150-160, April.
    8. Liu, Xiaohui & Buck, Trevor & Shu, Chang, 2005. "Chinese economic development, the next stage: outward FDI?," International Business Review, Elsevier, vol. 14(1), pages 97-115, February.
    9. Swati Virmani & Edmund Amann, 2015. "Is the evolution of India’s Outward FDI consistent with Dunning’s Investment Development Path sequence?," Working Papers 92160912, Lancaster University Management School, Economics Department.
    10. Gao, Lan & Liu, Xiaohui & Zou, Huan, 2013. "The role of human mobility in promoting Chinese outward FDI: A neglected factor?," International Business Review, Elsevier, vol. 22(2), pages 437-449.
    11. Marie Bohatá & Alena Zemplinerová, 2004. "Investice českých firem v zahraničí [Outward direct investment by czech companies]," Politická ekonomie, Prague University of Economics and Business, vol. 2004(1), pages 35-47.
    12. Anthony McDonnell & Jonathan Lavelle & Patrick Gunnigle & David G. Collings, 2007. "Management Research on Multinational Corporations: A Methodological Critique," The Economic and Social Review, Economic and Social Studies, vol. 38(2), pages 234-258.
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    14. Köller, Mareike, 2006. "Ausländische Direktinvestitionen in Irland: Eine theoriegestützte Analyse," University of Göttingen Working Papers in Economics 58, University of Goettingen, Department of Economics.
    15. Franck Barry, 2013. "The Knowledge Economy, Economic Transformations and ICT: Regional Dynamics in the Deployment Phase. Case study: Southern and Eastern Ireland," JRC Research Reports JRC83549, Joint Research Centre.
    16. Rajneesh Narula & John Dunning, 2010. "Multinational Enterprises, Development and Globalization: Some Clarifications and a Research Agenda," Oxford Development Studies, Taylor & Francis Journals, vol. 38(3), pages 263-287.
    17. Olivier Crevoisier & Frédéric Quiquerez, 2005. "Inter-regional corporate ownership and regional autonomy: the case of Switzerland," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 39(4), pages 663-689, December.
    18. Andrea Goldstein & Fazia Pusterla, 2008. "Emerging Economies’ Multinationals: General Features and Specificities of the Brazilian and Chinese Cases," KITeS Working Papers 223, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Oct 2008.
    19. Johnson, Andreas, 2006. "FDI and Exports: the case of the High Performing East Asian Economies," Working Paper Series in Economics and Institutions of Innovation 57, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    20. Maximilian Buchholz & Harald Bathelt & John A. Cantwell, 2020. "Income divergence and global connectivity of U.S. urban regions," Journal of International Business Policy, Palgrave Macmillan, vol. 3(3), pages 229-248, September.
    21. Mehmed Ganic, 2022. "Does Institutional Quality Matter for the IDP Hypothesis? Evidence from Emerging Europe," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 24(1), pages 83-113, June.

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