THE NEXUS BETWEEN FOREIGN DIRECT INVESTMENT AND DOMESTIC PRIVATE CAPITAL ACCUMULATION REVALUED: A CROSS-COUNTRY ASSESSMENT FOR 32 EMERGING MARKETS
Contenido principal del artículo
Resumen
ABSTRACT
This study examines the impact of greenfield Foreign Direct Investment (FDI) on domestic private investment in 32 emerging economies from 1995 to 2021. Using conventional panel data methods —Ordinary Least Squares, and Fixed/Random effects models—, initial results suggest that FDI crowds in domestic investment. However, when addressing endogeneity and cross-sectional dependence through difference and system Generalized Method of Moments (GMM) estimators and augmented with Common Correlated Effects (CCE), FDI becomes statistically insignificant. Thus, the apparent positive effect disappears when robust methods are used, thereby highlighting that the FDI-investment nexus is highly sensitive to econometric methodology, particularly those that address endogeneity and cross-country interdependence.
REVISANDO LA RELACIÓN ENTRE LA INVERSIÓN EXTRANJERA DIRECTA Y LA ACUMULACIÓN NACIONAL DE CAPITAL PRIVADO: UN ANÁLISIS TRANSVERSAL PARA 32 ECONOMÍAS EMERGENTES
RESUMEN
Este estudio examina el impacto de la inversión extranjera directa (IED) en proyectos greenfield sobre la inversión privada nacional en 32 economías emergentes durante el periodo 1995-2021. Los estimadores tradicionales de datos de panel (mínimos cuadrados ordinarios, efectos fijos y efectos aleatorios) sugieren inicialmente una relación positiva y estadísticamente significativa entre la IED y la inversión nacional. No obstante, al corregir la endogeneidad y la dependencia transversal mediante estimadores del método generalizado de momentos (GMM en diferencias y en sistema) y al incorporar estimadores de efectos correlacionados comunes (CCE), el coeficiente de la ied pierde toda significatividad estadística. En consecuencia, el aparente efecto estimulante de la inversión extranjera directa sobre la inversión privada nacional desaparece por completo cuando se emplean técnicas econométricas más robustas. Este resultado pone de manifiesto que la relación entre IED e inversión nacional es extremadamente sensible a la especificación econométrica, particularmente a aquellos métodos que controlan adecuadamente la endogeneidad y la interdependencia entre países.
Detalles del artículo
Citas en Dimensions Service
Citas
Adams, S. (2009). Foreign Direct Investment, Domestic Investment, and Economic Growth in Sub-Saharan Africa. Journal of Policy Modeling, 31(6), 939-949. https://doi.org/10.1016/j.jpolmod.2009.03.003
Agosin, M.R., and Machado, R. (2005). Foreign Investment in Developing Countries: Does it Crowd in Domestic Investment? Oxford Development Studies, 33(2), 149-162. https://doi.org/10.1080/13600810500137749
Arellano, M., and Bond, S. (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies, 58(2), 277. https://doi.org/10.2307/2297968
Arellano, M., and Bover, O. (1995). Another Look at the Instrumental Variable Estimation of Error-Components Models. Journal of Econometrics, 68(1), 29-51. https://doi.org/10.1016/0304-4076(94)01642-D
Aroche Reyes, F., and Márquez Mendoza, M.A. (2021). Demand-driven and Supply-sided Input-output Models. Journal of Quantitative Economics, 19(2), 251-267. https://doi.org/10.1007/s40953-020-00229-5
Arrizabalo, X., Boundi-Chraki, F., Carcanholo, M.D., Lagüela, E.P., Mateo Tomé, J.P., Murillo, J., del Río, A., and del Rosal, M. (2025). El desarrollo desigual del capitalismo. Ensayos desde la crítica de la economía política. Ecobook.
Barro, R.J. (1997). Macroeconomics. The MIT Press.
Barro, R.J., and Sala-i-Martin, X. (1992). Convergence. Journal of Political Economy, 100(2), 223-251. https://doi.org/10.1086/261816
Blundell, R., and Bond, S. (1998). Initial Conditions and Moment Restrictions in Dynamic Panel Data Models. Journal of Econometrics, 87(1), 115-143. https://doi.org/10.1016/S0304-4076(98)00009-8
Boundi-Chraki, F., and Perrotini-Hernández, I. (2024). Revisiting the Classical Theory of Investment: An Empirical Assessment from the European Union. Journal of Quantitative Economics, 22(1), 63-89. https://doi.org/10.1007/s40953-024-00385-y
Boundi-Chraki, F., and Perrotini-Hernández, I. (2025). Re-examining the Automation-employment Nexus from a Classical Political Economy Approach. Structural Change and Economic Dynamics, 75, 32-51. https://doi.org/10.1016/j.strueco.2025.05.001
Bun, M.J.G., and Windmeijer, F. (2010). The Weak Instrument Problem of the System GMM Estimator in Dynamic Panel Data Models. The Econometrics Journal, 13(1), 95-126. https://doi.org/10.1111/j.1368-423X.2009.00299.x
Chen, G.S., Yao, Y., and Malizard, J. (2017). Does Foreign Direct Investment Crowd in or Crowd Out Private Domestic Investment in China? The effect of entry mode. Economic Modelling, 61(June 2016), 409-419. https://doi.org/10.1016/j.econmod.2016.11.005
Clark, J.M. (1917). Business Acceleration and the Law Of Demand: A Technical Factor in Economic Cycles. Journal of Political Economy, 25(3), 217–235. https://doi.org/10.1086/252958
Cypher, J.M. (2021). The Process of Economic Development. Routledge. https://doi.org/10.4324/9780429289248
de Mesnard, L. (2024). Input-output Price Indexes: Forgoing the Leontief and Ghosh Models. Economic Systems Research, 36(2), 201-225. https://doi.org/10.1080/09535314.2022.2164179
Eberhardt, M. (2011). XTCD: Stata Module to Investigate Variable/Residual Cross-section Dependence. Statistical Software Components S457237. https://econpapers.repec.org/RePEc:boc:bocode:s457237
Everaert, G., and De Groote, T. (2016). Common Correlated Effects Estimation of Dynamic Panels with Cross-sectional Dependence. Econometric Reviews, 35(3), 428-463. https://doi.org/10.1080/07474938.2014.966635
Farla, K., de Crombrugghe, D., and Verspagen, B. (2016). Institutions, Foreign Direct Investment, and Domestic Investment: Crowding Out or Crowding in? World Development, 88, 1-9. https://doi.org/10.1016/j.worlddev.2014.04.008
Fujimori, A., and Sato, T. (2015). Productivity and Technology Diffusion in India: The Spillover Effects from Foreign Direct Investment. Journal of Policy Modeling, 37(4), 630-651. https://doi.org/10.1016/j.jpolmod.2015.04.002
Ghosh, T., and Parab, P.M. (2021). Assessing India’s Productivity Trends and Endogenous Growth: New Evidence from Technology, Human Capital and Foreign Direct Investment. Economic Modelling, 97(July 2020), 182-195. https://doi.org/10.1016/j.econmod.2021.02.003
Greene, W.H. (2003). Econometric Analysis. Pearson Education India.
Guerra, A.-I., and Sancho, F. (2011). Revisiting the Original Ghosh Model: Can it be Made More Plausible? Economic Systems Research, 23(3), 319-328. https://doi.org/10.1080/09535314.2011.566261
Ha, V., Holmes, M.J., and Tran, T.Q. (2022). Does Foreign Investment Crowd in Domestic Investment? Evidence from Vietnam. International Economics, 171, 18-29. https://doi.org/10.1016/j.inteco.2022.05.003
Hausman, J.A. (1978). Specification Tests in Econometrics. Econometrica, 46(6), 1251. https://doi.org/10.2307/1913827
Hirschman, A O. (1958). The Strategy of Economic Development. Yale University Press.
Hsiao, C. (2014). Analysis of Panel Data. Cambridge University Press.
Javorcik, B.S. (2004). Does Foreign Direct Investment Increase the Productivity of Domestic Firms ? In search of spillovers through backward linkages. The American Economic Review, 94(3), 605-627.
Jude, C. (2012). Horizontal and Vertical Technology Spillovers from FDI in Eastern Europe [Document de Recherche no. 2012-12], 33(33), 58-60.
Jude, C. (2019). Does FDI Crowd Out Domestic Investment in Transition Countries? Economics of Transition and Institutional Change, 27(1), 163-200. https://doi.org/10.1111/ecot.12184
Juodis, A., and Sarafidis, V. (2022). A Linear Estimator for Factor-augmented Fixed-t Panels with Endogenous Regressors. Journal of Business & Economic Statistics, 40(1), 1-15. https://doi.org/10.1080/07350015.2020.1766469
Lewis, W.A. (1955). Theory of Economic Growth. Routledge. https://doi.org/https://doi.org/10.4324/9780203709665
Mankiw, N.G., Romer, D., and Weil, D.N. (1992). A Contribution to the Empirics of Economic Growth. Quarterly Journal of Economics, 107(2), 407-437. https://doi.org/10.2307/2118477
Miller, R.E., and Blair, P.D. (2022). Input-Output Analysis: Foundations and Extensions. Cambridge University Press. https://doi.org/10.1017/9781108676212
Morrissey, O., and Udomkerdmongkol, M. (2012). Governance, Private Investment and Foreign Direct Investment in Developing Countries. World Development, 40(3), 437-445. https://doi.org/10.1016/j.worlddev.2011.07.004
Myrdal, G. (1957). Economic Theory and Underdeveloped Countries. Duckworth.
Ndikumana, L., and Verick, S. (2008). The Linkages between FDI and Domestic Investment: Unravelling the Developmental Impact of Foreign Investment in Sub-Saharan Africa. Development Policy Review, 26(6), 713-726. https://doi.org/10.1111/j.1467-7679.2008.00430.x
Neal, T. (2015). Panel Data Models with Endogenous Group Effects: Application to Common Correlated Effects Estimators [Workblacking Paper].
Newman, C., Rand, J., Talbot, T., and Tarp, F. (2015). Technology Transfers, Foreign Investment and Productivity Spillovers. European Economic Review, 76, 168-187. https://doi.org/10.1016/j.euroecorev.2015.02.005
Nguyen, H.T., Luu, H.N., and Do, N.H. (2021). The Dynamic Relationship between Greenfield Investments, Cross-border M& As, Domestic Investment and Economic Growth in Vietnam. Economic Change and Restructuring, 54(4), 1065-1089. https://doi.org/10.1007/s10644-020-09292-7
Nickell, S. (1981). Biases in Dynamic Models with Fixed Effects. Econometrica, 49(6), 1417. https://doi.org/10.2307/1911408
Obstfeld, M., and Rogoff, K. (1996). Foundations of International Macroeconomics. The MIT Press.
Pesaran, H. (2006). Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure. Econometrica, 74(4), 967-1012. https://doi.org/10.1111/j.1468-0262.2006.00692.x
Pesaran, M.H. (2021). General Diagnostic Tests for Cross-sectional Dependence in Panels. Empirical Economics, 60(1), 13-50. https://doi.org/10.1007/s00181-020-01875-7
Prebisch, R. (1949). El desarrollo económico de la América Latina y algunos de sus principales problemas. Trimestre Económico, 16(63(3)), 347-431.
Rasmussen, P.N. (1956). Studies in Inter-Sectoral Relations. North-Holland.
Romer, P.M. (1992). Two Strategies for Economic Development: Using Ideas and Producing Ideas. The World Bank Economic Review, 6(suppl 1), 63-91. https://doi.org/10.1093/wber/6.suppl_1.63
Roodman, D. (2009a). A Note on the Theme of too Many Instruments. Oxford Bulletin of Economics and Statistics, 71(1), 135-158. https://doi.org/10.1111/j.1468-0084.2008.00542.x
Roodman, D. (2009b). How to do Xtabond2: An Introduction to Difference and System GMM in Stata. The Stata Journal: Promoting Communications on Statistics and Stata, 9(1), 86-136. https://doi.org/10.1177/1536867X0900900106
Sarafidis, V., Yamagata, T., and Robertson, D. (2009). A Test of Cross Section Dependence for a linear Dynamic Panel Model with Regressors. Journal of Econometrics, 148(2), 149-161. https://doi.org/10.1016/j.jeconom.2008.10.006
Shah, S.H., Hasnat, H., Cottrell, S., and Ahmad, M.H. (2020). Sectoral FDI Inflows and Domestic Investments in Pakistan. Journal of Policy Modeling, 42(1), 96-111. https://doi.org/10.1016/j.jpolmod.2019.05.007
Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. Liberty Classics.
Solow, R.M. (1956). A Contribution to the Theory Of Economic Growth. The Quarterly Journal of Economics, 70(1), 65. https://doi.org/10.2307/1884513
Taylor, L. (1983). Structuralist Macroeconomics: Applicable Models for the Third World. Basic Books.
Windmeijer, F. (2005). A Finite Sample Correction for the Variance of Linear Efficient Two-step GMM Estimators. Journal of Econometrics, 126(1), 25-51. https://doi.org/10.1016/j.jeconom.2004.02.005
Young, A. (1928). Increasing Returns and Economic Progress. The Economic Journal, 38(152), 527-542. https://doi.org/10.1142/9789812701275_0023
Esta obra está bajo una licencia internacional Creative Commons Atribución-NoComercial-SinDerivadas 4.0.
Los autores que publiquen en esta revista acceden a las siguientes condiciones:
a) Los autores retienen los derechos de copia (copyright) y ceden a la revista el derecho de primera publicación, con el trabajo asimismo bajo la licencia Creative Commons Attribution License que permite a terceros utilizar lo publicado siempre que hagan referencia al autor o autores del trabajo y a su publicación en esta revista.
b) Los autores son libres de realizar otros acuerdos contractuales para la distribución no exclusiva del artículo que publiquen en esta revista (como puede ser incluirlo en una colección institucional o publicarlo en un libro), siempre que indiquen claramente la publicación original del trabajo en esta revista.