HOME COUNTRY EFFECTS FROM FOREIGN DIRECT INVESTMENTS

This article studies home country effects from foreign direct investme nt. Previous studies have shown a positive covariation between foreign production production and exports. If this relation is extended, a po sitive covariation should also be expected between foreign and domesti c investments. Sweden is one of few industrial countries for which dat a is available that makes a study of the relation between these types of investments possible. When the relation is studied for the period 1 982 to 1992 a significant negative covariation is found between knowle dge-intensive companies' investments in Sweden and in the EU. Hence, a s a response to a fear of a ''fortress Europe'' knowledge-intensive in vestments have been outlocated. It is hypothesized that a similar resp onse to the EC 1992 program should also have affected Finland and Norw ay. The result of a study of the knowledge-intensity of the 10 largest value-added contributors in each of the Nordic countries exhibits tha t the most dramatic decrease in the knowledge-intensity of the industr ial core has occurred in Sweden, whereas the Norwegian core of industr y experienced only a small decrease and the Finnish core remained almo st unaffected.