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The Investment Development Path Hypothesis: Evidence from the Portuguese Case – A Panel Data Analysis

Author

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  • Miguel Fonseca
  • António Mendonça
  • José Passos

Abstract

Looking at the transformations that took place in the world economy after Second World War, as a result of liberalization, deregulation and market opening process, one of the most striking features was the significant expansion of Foreign Direct Investment. So, the main purpose of this paper is to discuss the positioning of Portugal – a small open economy in the extreme west of Europe - in this context. Our analysis is based on the Investment Development Path (IDP) theory, according to which the inward and outward investment position of a country is tied with its economic development. In the present research, this hypothesis is estimated empirically for Portugal and other 25 countries in different stages of development, using fixed-effects panel data models. Generally, our results find support for IDP paradigm, although it is impossible to capture all the stages predicted theoretically, given the lack of heterogeneity between the most countries of our sample and the relatively short time period considered.

Suggested Citation

  • Miguel Fonseca & António Mendonça & José Passos, 2007. "The Investment Development Path Hypothesis: Evidence from the Portuguese Case – A Panel Data Analysis," Working Papers Department of Economics 2007/21, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    • Handle: RePEc:ise:isegwp:wp212007
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    Cited by:

    1. André C. Jordaan & Mustafa Sakr, 2016. "Emerging multinational corporations: A prominent player in the global economy," Working Papers 590, Economic Research Southern Africa.
    2. Mustafa Sakr & Andre Jordaan, 2017. "Foreign Market Selection of Emerging Multinational Corporations: Evidence from South African and Egyptian Corporations," Working Papers 201734, University of Pretoria, Department of Economics.
    3. André C. Jordaan & Mustafa Sakr, 2016. "Emerging multinational corporations: Theoretical and conceptual framework," Working Papers 574, Economic Research Southern Africa.
    4. André C. Jordaan & Mustafa Sakr, 2017. "Push factors of emerging multinational corporations: evidence from South Africa and Egypt," Working Papers 664, Economic Research Southern Africa.
    5. 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.
    6. Jacek Klich, 2014. "Foreign Direct Investment in the Visegrad Countries after 2004: Have the Visegrad Countries’ Membership in the European Union Changed Something?," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 2(3), pages 19-31.

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