Does outward foreign direct investment crowd in or crowd out domestic investment in central, east and southeast europe countries? an asymmetric approach

The previous empirical literature, relevant to Central, East and Southeast European (CESEE) countries, has mostly examined the effect of inward FDI but neglected the effect of outward foreign direct investment (OFDI) on domestic investment. Domestic companies and local foreign subsidiaries owned by multinational companies are the main sources of OFDI from the CESEE countries. The growth in the volume of OFDI from CESEE countries is a consequence of strengthening the competitiveness of companies. Despite this, these countries are still net recipients of FDI, because they get significantly higher FDI inflow than FDI outflow. We used the nonlinear autoregressive distributed lag (NARDL) model, a sample of 13 CESEE countries and the annual data for the period from 1995 to 2019 in this study. In the long run, we found there to be an asymmetric effect from OFDI on the domestic investments of Bulgaria, Estonia, Latvia, Poland, Russia, Slovenia and the Ukraine. We also found that OFDI has a crowding-out effect on the domestic investment of Bulgaria, Poland and the Slovenia, while it has a crowding-in effect on the domestic investment of Estonia, Latvia, Ukraine and the Russia.