Financing FDI into Developing Economies and the International Transmission of Business Cycle Fluctuations D D*

ment fluctuations […] cyclical swings, which are reflected in the earnings situation of German subsidiaries located in other countries, can be transmitted rapidly to groups as a whole through these [inter-nal] financial links and can affect not only local investment activity but potentially also invest-ment in the parent company’s country of domicile. (D B, 2003, p. 65) 1