ABSTRACT
The purpose of this chapter is to provide a selective survey of the literature on some of the home country effects of FDI, and to discuss a few questions that have rarely been addressed in detail in earlier research. The focus will be on production interactions between the foreign and domestic operations of multinational firms. These interactions occur because FDI typically affects the MNC’s home country operations. The most common question in this context has concerned the impact of outward investment on home country exports: does the establishment of a foreign affiliate substitute for home exports or increase home exports of components and intermediate goods used by the foreign affiliates?1
