Foreign and domestic investment:regional development or crowding out?


This paper tests, at the regional and industry level, the extent to which domestic investment is stimulated or crowded out by inward foreign direct investment. The paper develops a model of domestic investment, based on standard models drawn from macroeconomics and industrial economics. The paper then goes on to show that, at a general level, the 'development' or agglomeration hypothesis is confirmed that domestic investment is indeed stimulated by inward investment. However, there is also evidence that, in certain regions, inward investment has crowded out domestic investment. The implications of this from the perspective of regional policy are briefly discussed.

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Divisions: College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship
College of Business and Social Sciences > Aston Business School > Aston India Foundation for Applied Research
Additional Information: This is an Author's Accepted Manuscript of an article published in Driffield, N., & Hughes, D. (2003). Foreign and domestic investment: regional development or crowding out?. Regional studies, 37(3), 277-288. Regional studies 2003 © Regional Studies Association, Taylor & Francis, available online at:
Uncontrolled Keywords: inward investment,domestic investment,crowding out
Publication ISSN: 1360-0591
Last Modified: 27 Jun 2024 07:38
Date Deposited: 13 Oct 2009 15:41
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Related URLs: http://www.scop ... tnerID=8YFLogxK (Scopus URL)
http://www.tand ... 340032000065433 (Publisher URL)
PURE Output Type: Article
Published Date: 2003-05
Authors: Driffield, Nigel (ORCID Profile 0000-0003-1056-3117)
Hughes, Dylan



Version: Accepted Version

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