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

Author

Listed:
  • Frank Barry

    (University College Dublin)

  • Holger Görg

    (University of Nottingham)

  • Andrew McDowell

    (Forfás)

Abstract

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 FDI over the last three decades, the country's rapid recent FDI-fuelled growth, 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 shows up important differences between Ireland's outward FDI and the bulk of FDI occurring in the world economy however. Ireland's outward FDI flows are as yet almost exclusively horizontal and they go largely into non-internationally-tradable manufacturing and services sectors. Also, the firmspecific assets of Irish multinationals lie neither in R&D nor in the type of product differentiation associated with high advertising expenditures.

Suggested Citation

  • Frank Barry & Holger Görg & Andrew McDowell, 2001. "Outward FDI and the Investment Development Path of a Late-Industrialising Economy - Evidence from Ireland," Working Papers 200108, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:200108
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    References listed on IDEAS

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    Cited by:

    1. Gorynia, Marian & Nowak, Jan & Trąpczyński, Piotr & Wolniak, Radosław, 2019. "Friend or Foe? On the role of institutional reforms in the investment development path of Central and East European economies," International Business Review, Elsevier, vol. 28(3), pages 575-587.
    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.
    13. repec:got:cegedp:58 is not listed on IDEAS
    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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