Reverse FDI in Europe: An Analysis of Angola's FDI in Portugal

Abstract

This paper analyses foreign direct investment (FDI) of Angola in Portugal. The reverse investment of African countries in Europe is a recent economic event that needs to be analysed, theoretically explained and empirically tested. A dynamic theoretical model is presented and a Bayesian model tests the model validating it. The results reveal that imports and corruption increase Angola FDI in Portugal. Some variables affect negatively Angola FDI in Portugal such as lagged Angola FDI, signifying an autoregressive negative effect in Portugal; the Portuguese official development assistance (ODA) to Angola, which are direct transfers from Portugal to Angola; and Angola's GDP. Policy implications are discussed.Ã The authors acknowledge financial support from national funds by FCT (Fundação para a Ciência e a Tecnologia). This article is part of the Strategic Project: PEst-OE/EGE/UI0436/2014.

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