Outward FDI and Domestic Investment: Evidence from World’s Largest Economies

Halwan Musaad Mansour A, Saudi Ministry of Education .

Abstract


This study provides empirical evidence of the impacts of FDI outflows on domestic investment in the world’s largest economies using panel data analysis. Our estimates using system-Generalized Method of Moments (GMM) suggest that FDI outflows have positive effects on domestic investment. From 2002-2014, OFDI had significant long-term effects on domestic investment among the world’s largest economies. Our system-GMM model results show that a one dollar increase in OFDI leads to an increase of 0.0894 dollars of domestic investment in the long term.

Keywords: Outward FDI; Domestic investment; Endogeneity; Panel Data

JEL Classification numbers: C23; F21; F22; F23


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ISSN (Paper)2222-1700 ISSN (Online)2222-2855

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