Effects of Foreign Investment on Domestic Private Equity
- 15 September 2020
- journal article
- research article
- Published by Taylor & Francis Ltd in International Journal of the Economics of Business
- Vol. 28 (2), 247-279
- https://doi.org/10.1080/13571516.2020.1783938
Abstract
Using a sample of 23 OECD countries, studied over a period of 20 years (1995–2015), we find that direct foreign investment has a spillover effect on private equity (PE) in that it supports the development of the domestic PE industry. We also show how contextual variables influence the investment process. Our results suggest that a positive effect on domestic PE dynamics can be seen if the number of foreign PE deals is measured, while calculations using the value of foreign PE investments show mixed results. The positive effect of foreign investment on domestic PE activity persists where low gross capital formation is adopted and in low value-added environments. Foreign PE investment increases overseas activity in the host country’s domestic PE industry. These effects are proportional to the size of the foreign fund. Foreign PE activity related to firms in the early stages of development encourage domestic PE industry activity in the same kind of firms.Keywords
This publication has 73 references indexed in Scilit:
- Emerging economies' attraction of foreign direct investmentEmerging Markets Review, 2012
- Do Complicated Tax Systems Prevent Foreign Direct Investment?Economica, 2012
- Foreign direct investment and institutional quality: Some empirical evidenceInternational Review of Financial Analysis, 2012
- Formal institutions, culture, and venture capital activity: A cross-country analysisJournal of Business Venturing, 2012
- The Linkages Between FDI and Domestic Investment: Unravelling the Developmental Impact of Foreign Investment in Sub‐Saharan AfricaDevelopment Policy Review, 2008
- Spillovers and competition among foreign and local firms in ChinaStrategic Management Journal, 2008
- The legislative road to Silicon ValleyOxford Economic Papers, 2006
- Spillover effects of foreign direct investments on Turkish manufacturing industryJournal of International Development, 2000
- The syndication of private equity: Evidence from the UKVenture Capital, 1999
- Foreign direct investment in developing countries and growth: A selective surveyThe Journal of Development Studies, 1997