| A3) DOMESTIC INVESTMENT ! |
| BD2) Industrial sector: Manufacturing sector |
| C2) Regulations |
| BD9) Time since investment: Long-term |
| C4) Financial support |
| C8) Operational support |
| C9) Maximising benefits |
There is growing empirical evidence that OFDI has a positive association with domestic investment in the home country, especially in manufacturing sectors and after a longer period since the investment was made. A few studies, however, also find a negative effect.
Regulatory easing in the manufacturing sector could therefore promote this home-country effect as could financial support measures with long durations. Operational support on the ground should also be offered to investments over long periods of time, and efforts to maximise benefits from OFDI should also be made with a long-term perspective.
Key insights
- To facilitate that OFDI leads to more domestic investment, financial and operational support measures should, in particular, be introduced in a way so they support OFDI over long periods of time.