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Macroeconomic effects of foreign direct investment in the Spanish economy

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  • Blake, Adam
  • Gomez-Plana, Antonio Gomez
  • Latorre Munoz, María C.

Abstract

The present paper analyses the effects of Foreign Direct Investment (FDI) in Spain using a Computable General Equilibrium (CGE) model. It is the first model that undertakes a general equilibrium framework to grasp the effects of multinationals for the Spanish case. And it is a first step in building one of only a few CGE models offering a complete description of the foreign sector. The model shows evidence of crowding out of domestic production after FDI inflows. Further, FDI outflows produce bigger effects on aggregate output than equivalent amounts of FDI inflows, which is an alarming sign for the Spanish economy as it is currently undergoing a process of delocalization.

Suggested Citation

  • Blake, Adam & Gomez-Plana, Antonio Gomez & Latorre Munoz, María C., 2005. "Macroeconomic effects of foreign direct investment in the Spanish economy," Conference papers 331357, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331357
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    References listed on IDEAS

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