Does mining FDI crowd in other investments? Investigation of FDI intersectoral linkages

• Main Authors: Doytch, Nadia, Mendoza, Ronald U, Siriban, Charles I
• Format: text
• Published: Archīum Ateneo 2015
• Subjects: foreign direct investment (FDI); spillovers; crowding in effect; extractive industries; Public Affairs, Public Policy and Public Administration
• Online Access: https://archium.ateneo.edu/asog-pubs/154; https://link.springer.com/article/10.1057/ces.2015.2
• Institution: Ateneo De Manila University

This paper analyzes whether mining FDI ‘crowds in’ or ‘out’ FDI in other sectors via intersectoral linkages. It utilizes a novel data set covering an unbalanced panel of sector-disaggregated FDI flows for 70 countries during the period from 1985 to 2010. Results show differential effects of mining FDI on FDI in other sectors (manufacturing, financial services, non-financial services) and across country groups. Some of the most interesting results are seen in the high-income countries group, where mining FDI is observed to have a crowding-out effect on financial services FDI, and in the lower middle-income countries group, where mining FDI is observed to crowd in both manufacturing and financial services FDI.