Institutions, Foreign Direct Investment, and Domestic Investment: Crowding Out or Crowding In?

Farla, Kristine; Crombrugghe, Denis de; Verspagen, Bart

doi:10.1016/j.worlddev.2014.04.008

Cited by 130 publications

(142 citation statements)

References 40 publications

Supporting

Mentioning

114

Contrasting

Order By: Relevance

“…According to our results in the first column of Table 1, the coefficient of the proxy of overall institutional quality is positive but insignificant as opposed to the coefficient of its interaction with C-B M&A, which is consistent with the findings of Farla et al (2016). Our results show that the overall quality of the institutional setting negatively and significantly affects the relation between this type of FDI and domestic investment.…”

Section: Resultssupporting

confidence: 89%

“…The authors asserted that this negative impact is related to quality of governance in developing countries: the extent of the crowding-out of domestic investment is higher when institutional quality improves. Farla et al (2016) also pointed out that while the variable of institutional quality is positive and significant, its interaction with FDI is negative and significant.…”

Section: Resultsmentioning

confidence: 95%

“…Farla et al (2016) show that FDI inflows contribute positively to domestic investment. They point out that this positive spillover effect is often offset by the negative impact of rent-seeking interests in the provision of preferential treatment of foreign investors on investment.…”

Section: Literature Reviewmentioning

confidence: 98%

“…Following the approach of Morrissey and Udomkerdmongkol (2012) and Farla et al (2016), we estimated the effect of C-B M&A on domestic investment with this form of panel model specification:…”

Section: Empirical Model and Datamentioning

confidence: 99%

See 3 more Smart Citations

Institutions as a Mediator of the Effect of Crossborder Mergers & Acquisitions on Domestic Investment

Lobanova¹,

Kračun²,

Kavkler³

2018

Prague Economic Papers

View full text Add to dashboard Cite

In this article we analyse the impact of the interaction between cross-border mergers and acquisitions and the quality of the institutional setting on domestic investment using panel data for 22 European transition countries from 2000 to 2014. We investigate whether the progress and durability of institutional reforms have a crucial influence on the economic performance of crossborder mergers and acquisitions in transition countries. Our empirical findings indicate that contemporaneous cross-border mergers and acquisitions have a crowding-out effect on domestic investment in the year of merger or acquisition, but the influence of their lagged level has a strong crowding-in effect one year later. We find that the overall quality of the institutional setting and the rule of law negatively and significantly affect the relation between this type of foreign direct investment and domestic investment, both in the short and long run. Political stability exhibits a positive and significant impact on domestic investment in the current period and over time.

show abstract

Section: Resultssupporting

confidence: 89%

Section: Resultsmentioning

confidence: 95%

Section: Literature Reviewmentioning

confidence: 98%

Section: Empirical Model and Datamentioning

confidence: 99%

See 2 more Smart Citations

Institutions as a Mediator of the Effect of Crossborder Mergers & Acquisitions on Domestic Investment

Lobanova¹,

Kračun²,

Kavkler³

2018

Prague Economic Papers

View full text Add to dashboard Cite

show abstract

“…In the recent empirical study based on firm-and industry-level data for the period 2003-2011 by Amighini et al (2017), the authors showed that FDI produced positive spillovers on total investment, in particular within the recipient industries. Farla et al (2016) investigated the impact of institutional quality in mediating the economic effect of FDI on domestic investment activity in 46 developing countries from 1996 to 2009. They found that FDI has a crowding-in effect, while its interaction with "good governance" causes negative megiation effect on domestic investment.…”

Section: Literature Reviewmentioning

confidence: 99%

Effects of Cross-Border Mergers and Acquisitions on GDP Per Capita and Domestic Investment in Transition Countries

Lobanova¹,

Kračun

Kavkler

2018

Journal of Business Economics and Management

View full text Add to dashboard Cite

Abstract. The study investigates the impact of cross-border mergers and acquisitions on GDP per capita and domestic investment in 22 European transition countries from 2000 to 2014 by using the system Generalized Method of Moments estimator. The main implications are that cross-border mergers and acquisitions have a negative effect on GDP per capita in the year of merger or acquisition, while their lagged level shows a positive impact. From long-term perspective, this type of FDI has negative and significant effect on GDP per capita. The results show that one-year lagged cross-border mergers and acquisitions positively affects domestic investment, suggesting that spillover effects of this type of investment can be expected not earlier than one year after the merger or acquisition. The value of this paper is that our results show how the advances in structural reforms enhance GDP per capita whereas their influence on domestic investment activity is insignificant. We found that there is insignificant impact of the relationship between overall structural reforms and cross-border mergers and acquisitions on GDP per capita and domestic investment both in short and long run. The originality of this study lies in investigation of the dynamic nature of cross-border mergers and acquisitions and their economic effects depending on the quality of structural reforms.

show abstract

The relationship between FDI inflows and private investment in Vietnam: Does institutional environment matter?

Bổn¹

2020

Int. J Fin Econ

View full text Add to dashboard Cite

The recent literature confirms that foreign direct investment (FDI) can crowd out/in private investment. However, questions concerning the FDI–private investment relationship under different kinds of institutional environment is of great interest. This study examines the role of institutional environment in the FDI–private investment relationship in Vietnam using the two‐step GMM Arellano–Bond estimators for a balanced panel data of 52 provinces during the period 2005–2014. More interestingly are the empirical findings. First, both FDI and institutional environment significantly boost private investment. Second, the FDI–private investment relationship completely varies based on the quality of institutional environment. Third, the positive effects of government revenue and government investment remain under different institutional environments. These findings suggest some important implications for governments in developing countries, especially the Vietnam government.

show abstract

Institutions, Foreign Direct Investment, and Domestic Investment: Crowding Out or Crowding In?

Cited by 130 publications

References 40 publications

Institutions as a Mediator of the Effect of Crossborder Mergers & Acquisitions on Domestic Investment

Institutions as a Mediator of the Effect of Crossborder Mergers & Acquisitions on Domestic Investment

Effects of Cross-Border Mergers and Acquisitions on GDP Per Capita and Domestic Investment in Transition Countries

The relationship between FDI inflows and private investment in Vietnam: Does institutional environment matter?

Contact Info

Product

Resources

About