Effect Of Foreign Direct Investments On Domestic Investments Of Developing Countries: A Dynamic Panel Data Analysis

Effect Of Foreign Direct Investments On Domestic Investments Of Developing Countries: A Dynamic Panel Data Analysis

İsmet , Göçer

Foreign direct investments are regarded as a significant source of investment in developing countries. However, foreign direct investments may affect domestic investments in different aspects. They can enforce the domestic firms to crowd out of the sector, or crowd in them. In this study; the effects of foreign direct investments for developing countries was examined by means of panel unit root tests and dynamic panel data analysis, within using belonging 35 countries 1992-2010 period data. As an empirical results obtained from the analysis; foreign direct investments increases domestic investments and has got crowding in effects in developing countries. In these countries, $1 of foreign direct investment (FDI) causes $2.64 increasing in total investment. Keywords: Foreign Direct Investment, Crowding in-Crowding out Effects, Developing Countries. Jel Codes: E22, F21, G11, P33.

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PeerReviewed

2012-05-31

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