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Effects of Outward Foreign Direct Investment on Domestic Investment: The Cases of Brazil and China

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  • Igor Gondim
  • Mario Henrique Ogasavara
  • Gilmar Masiero

Abstract

Policymakers face a dilemma over their investment‐promotion strategies for becoming more competitive in international markets. Encouraging firms to invest abroad could reduce domestic economic activity. We investigate this issue by analysing the long‐ and short‐run relationships between outward foreign direct investment and domestic investment for Brazil and China. We use a time series approach, namely autoregressive distributed lag for the period between 1975 and 2013. Our findings indicate a crowding‐in effect of outward foreign direct investment on domestic investment for both countries. Copyright © 2018 John Wiley & Sons, Ltd.

Suggested Citation

  • Igor Gondim & Mario Henrique Ogasavara & Gilmar Masiero, 2018. "Effects of Outward Foreign Direct Investment on Domestic Investment: The Cases of Brazil and China," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(8), pages 1439-1454, November.
    • Handle: RePEc:wly:jintdv:v:30:y:2018:i:8:p:1439-1454
    DOI: 10.1002/jid.3368
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    Cited by:

    1. Afi, Hatem & Boubaker, Sabri & Omri, Anis, 2022. "Do foreign investment and economic freedom matter for behavioral entrepreneurship? Comparing opportunity versus necessity entrepreneurs," Technological Forecasting and Social Change, Elsevier, vol. 181(C).
    2. Hangtian Xu & Fuqiang Yang & Wenzhuo Zheng, 2024. "The effectiveness of government incentives for outward investment: The case of China's Belt and Road Initiative," Contemporary Economic Policy, Western Economic Association International, vol. 42(3), pages 498-523, July.
    3. Liao, Hongwei & Yang, Liangping & Dai, Shuanping & Van Assche, Ari, 2021. "Outward FDI, industrial structure upgrading and domestic employment: empirical evidence from the Chinese economy and the belt and road initiative," Journal of Asian Economics, Elsevier, vol. 74(C).
    4. Safet Kurtović & Nehat Maxhuni & Blerim Halili & Bujar Krasniqi, 2022. "Does outward foreign direct investment crowd in or crowd out domestic investment in central, east and southeast europe countries? an asymmetric approach," Economic Change and Restructuring, Springer, vol. 55(3), pages 1419-1444, August.

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