Productivity and Trade Spillovers: Horizontal Crowding-Out versus Vertical Synergies in Europe as a Response to Foreign Direct Investment

The paper is devoted to the empirical estimation of the effects of foreign direct investment (FDI) on domestic investment in the Russian economy. The results suggest that there are crowding-out effects of FDI on the Russian economy. Using the firm-level database for 2008—2017, we analyze the presence of foreign companies in the Russian economy on the region, industry and industry in region levels. On the regional level the statistically significant effects of crowding out domestic investment are identified for state-owned, large as well as less effective companies. On the industry level the negative effects of crowding out are observed in case when FDI share in the industry exceeds 25. Estimating the effect of FDI presence on the industry in the region level, we reveal crowding out effects mainly for private and more effective national companies. Analyzing the effects in case of different levels of FDI in the economy, we do not find support for the hypothesis of adaptation of national companies for foreign companies’ presence in the economy. The paper suggests that the government policy in FDI regulation should focus on mitigation of the effects of pushing national companies off the market, and also creating conditions for cooperation of foreign and domestic companies.

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Apakah Kualitas Institusi Berpengaruh pada Arus Masuk FDI di ASEAN?

Jurnal Ekonomi dan Pembangunan Indonesia ◽

10.21002/jepi.v20i2.1132 ◽

2020 ◽

Vol 20 (2) ◽

pp. 146-159

Author(s):

Ali Akbar Septiantoro ◽

Heni Hasanah ◽

Muhammad Findi Alexandi ◽

Sri Retno Wahyu Nugraheni

Keyword(s):

Foreign Direct Investment ◽

Panel Data ◽

Gross Domestic Product ◽

Direct Investment ◽

Institutional Quality ◽

Political Stability ◽

Capital Formation ◽

Crowding Out ◽

Government Effectiveness ◽

Fixed Capital Formation

This paper examines the impact of institutional quality (government effectiveness index, voice and accountability index, and political stability) and economic variables (Gross Domestic Product [GDP], inflation, trade openness, and gross fixed capital formation) on Foreign Direct Investment (FDI) inflows in ASEAN 2012–2016 by using panel data analysis. The obtained results indicate that economics variables have a greater impact on FDI than political stability indicator. Our findings also suggest that insignificant effect of democracy and institutional quality indicator on FDI caused by the high level of corruption in ASEAN which maybe has a crowding out effect to level of democracy and institutional quality. ----------------------------------- Tujuan dari penelitian ini adalah untuk mengetahui pengaruh kualitas institusi (indeks government effectiveness, indeks voice and accountability, indeks stabilitas politik) dan variabel ekonomi lain (Gross Domestic Product [GDP], inflasi, keterbukaan perdagangan, dan gross fixed capital formation) terhadap Foreign Direct Investment (FDI) pada negara ASEAN periode tahun 2012–2016 dengan menggunakan analisis panel data. Hasil estimasi menunjukkan bahwa variabel ekonomi memiliki pengaruh yang lebih besar terhadap FDI dibandingkan dengan indikator stabilitas politik. Hasil kajian ini juga menemukan bahwa tidak signifikannya pengaruh indikator demokrasi dan kualitas institusi terhadap FDI dikarenakan tingginya tingkat korupsi yang mungkin memiliki efek crowding out terhadap tingkat demokrasi dan kualitas institusi.

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FOREIGN DIRECT INVESTMENT, PRODUCTIVITY AND CROWDING-OUT: DYNAMIC PANEL EVIDENCE ON VIETNAMESE FIRMS

Proceedings of the 5th Economic & Finance Conference, Miami ◽

10.20472/efc.2016.005.022 ◽

2016 ◽

Author(s):

Hanh Pham

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Crowding Out ◽

Dynamic Panel

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IMPACT OF FDI ON LITHUANIAN ECONOMY: INSIGHT INTO DEVELOPMENT OF MAIN ECONOMIC ACTIVITIES

Journal of Business Economics and Management ◽

10.3846/16111699.2007.9636181 ◽

2007 ◽

Vol 8 (4) ◽

pp. 285-290 ◽

Cited By ~ 28

Author(s):

Manuela Tvaronavičienė ◽

Virginija Grybaitė

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Direct Investment ◽

Foreign Capital ◽

Crowding Out ◽

Economic Activities ◽

Local Business ◽

Different Levels ◽

Insight Into

Aim of the paper is to estimate impact of foreign direct investment (FDI) on growth of economy in Lithuania. In order to detect specifics of development of main economic activities, differences in structure of FDI and structure of GDP of host economy are being juxtaposed, FDI intensity indicator in main economic activities elaborated. Authors test if different levels of penetration of foreign capital into certain economic activities serve as important factor affecting their economic growth. Research is being developed further by making assumption about higher concentration of FDI intensive economic activities. Higher concentration in that context would be interpreted as possible crowding out of local business firms from FDI intensive industries.

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The interaction between Foreign Direct Investment and Domestic Investment: Is there crowding out effect?

Journal of Eastern European and Central Asian Research ◽

10.15549/jeecar.v7i2.446 ◽

2020 ◽

Vol 7 (2) ◽

pp. 163-174

Author(s):

Tugba Akin ◽

Ozge Bolaman Avcı

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Slovak Republic ◽

Free Market ◽

Panel Data Analysis ◽

European Countries ◽

Crowding Out ◽

Eastern European ◽

Domestic Investment ◽

Eastern European Countries

After the fall of communism, Central and Eastern European countries have experienced a transition process in which a remarkable increase is observed in foreign direct investment flows into the region. During this process, when transition countries tried to adopt a free-market economy instead of a closed centrally structured economy, funds obtained through FDI constituted an essential way of financing for these countries that were trying to restructure their economy. Study questions the existence of the crowding-out effect by using data from Eastern European Countries, including Romania, the Russian Federation, Moldova, Poland, Bulgaria, Hungary, Slovak Republic, Ukraine. With this aim, PANIC Bai and Ng (2004), the bias-corrected PANIC Westerlund and Larsson (2009) unit root tests, and panel data analysis are implemented. Results obtained were consistent with theoretical expectations and showed that FDI had a crowding-out effect in the short run but, in the long run, a crowding-in impact on domestic investment.

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