Arbeitspapier

Foreign direct investment, competition and industrial development in the host country

This paper analyses the impact of foreign direct investment (FDI) on the development of local firms. We focus on two likely effects of FDI: a competition effect which deters entry of domestic firms and positive market externalities which foster the development of local industry. Using a simple theoretical model to illustrate how these forces work we show that the number of domestic firms follows a u-shaped curve, where the competition effect first dominates but is gradually outweighed by positive externalities. Evidence for Ireland tends to support this result. Specifically, applying semi-parametric regression techniques on plant level panel data for the manufacturing sector we find that while the competition effect may have initially deterred domestic firms? entry, this initial effect has been outpaced by positive externalities making the overall impact of FDI largely positive in this country.

Sprache
Englisch

Erschienen in
Series: DIW Discussion Papers ; No. 426

Klassifikation
Wirtschaft
Thema
Foreign direct investment
spillovers
industrial development
firm entry
semiparametric estimations
Direktinvestition
Unternehmensentwicklung
Internationaler Wettbewerb
Spillover-Effekt
Markteintritt
Irland

Ereignis
Geistige Schöpfung
(wer)
Barrios Cobos, Salvador
Görg, Holger
Strobl, Eric
Ereignis
Veröffentlichung
(wer)
Deutsches Institut für Wirtschaftsforschung (DIW)
(wo)
Berlin
(wann)
2004

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Barrios Cobos, Salvador
  • Görg, Holger
  • Strobl, Eric
  • Deutsches Institut für Wirtschaftsforschung (DIW)

Entstanden

  • 2004

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