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The short-run effects of knowledge intensive greenfield FDI on new domestic entry

Existing evidence on the impact of foreign direct investment on domestic economies remains ambiguous. Positive technology spillovers of foreign investment may be outweighed by negative crowding out effect due to increased competition. In this paper, we employ a unique country/sector-level data set t...

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Detalles Bibliográficos
Autores principales: Amoroso, Sara, Müller, Bettina
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Springer US 2017
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6548471/
https://www.ncbi.nlm.nih.gov/pubmed/31231151
http://dx.doi.org/10.1007/s10961-017-9575-y
Descripción
Sumario:Existing evidence on the impact of foreign direct investment on domestic economies remains ambiguous. Positive technology spillovers of foreign investment may be outweighed by negative crowding out effect due to increased competition. In this paper, we employ a unique country/sector-level data set to investigate the impact of what is considered the ‘best’ type of foreign investment—greenfield knowledge intensive FDI—on domestic entry. Our results suggest that, in the short run, this type of FDI is positively related to the entry rate in the host country, if the domestic sector is either dynamic, or highly R&D intensive. These sectors may be respectively characterized by lower entry costs, which encourage a ‘trial-and-error’ learning business approach, and by a higher level of absorptive capacity which increases the chance of technology transfer. ELECTRONIC SUPPLEMENTARY MATERIAL: The online version of this article (doi:10.1007/s10961-017-9575-y) contains supplementary material, which is available to authorized users.