The Impact of Horizontal and Vertical FDI on Host's Country Economic Growth

International Business Review, 17 (2008)

21 Pages Posted: 30 May 2014

See all articles by Sjoerd Beugelsdijk

Sjoerd Beugelsdijk

University of Groningen

Roger Smeets

Rutgers, The State University of New Jersey - Management & Global Business

Remco C. J. Zwinkels

Vrije Universiteit Amsterdam; Tinbergen Institute - Tinbergen Institute Amsterdam (TIA)

Date Written: November 1, 2008

Abstract

In this paper, we contribute to the literature investigating the impact of FDI on host country economic growth by distinguishing between the growth effects of horizontal (market seeking) FDI and vertical (efficiency seeking) FDI. Using a new database, we estimate the growth effects of vertical and horizontal US MNE activity into 44 host countries over the period 1983–2003, also using traditional total FDI figures as a benchmark. Controlling for endogeneity and absorptive capacity effects, we find that horizontal and vertical FDI have positive and significant growth effects in developed countries. Moreover, our results indicate a superior growth effect of horizontal FDI over vertical FDI. In line with existing literature, we find no significant effects of horizontal or vertical FDI in developing countries.

Suggested Citation

Beugelsdijk, Sjoerd and Smeets, Roger and Zwinkels, Remco C.J., The Impact of Horizontal and Vertical FDI on Host's Country Economic Growth (November 1, 2008). International Business Review, 17 (2008). Available at SSRN: https://ssrn.com/abstract=2442959

Sjoerd Beugelsdijk

University of Groningen ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

Roger Smeets (Contact Author)

Rutgers, The State University of New Jersey - Management & Global Business ( email )

Newark, NJ
United States

Remco C.J. Zwinkels

Vrije Universiteit Amsterdam ( email )

De Boelelaan 1105
Amsterdam, NL-1081HV
Netherlands
+31 20 59 85220 (Phone)

HOME PAGE: http://research.vu.nl/en/persons/remco-zwinkels

Tinbergen Institute - Tinbergen Institute Amsterdam (TIA) ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

Register to save articles to
your library

Register

Paper statistics

Downloads
157
Abstract Views
794
rank
185,882
PlumX Metrics